Auditing Chapter 7 Evidence

 Multiple Choice Questions From CPA Examinations

7-29 a. (2) b. (1) c. (4) d. (1)

7-30 a. (3) b. (3) c. (4)

7-32 1. (5) inquiry of client
2. (7) observation
3. (1) physical examination
4. (2) confirmation
5. (6) reperformance
6. (2) confirmation
7. (3) documentation
8. (4) analytical procedures
9. (5) inquiry of client
10. (6) reperformance
11. (7) observation
12. (1) physical examination
13. (4) analytical procedures
14. (3) documentation
15. (5) inquiry of client
16. (4) analytical procedures
17. (3) documentation
18. (6) reperformance
19. (1) physical examination
20. (2) confirmation

7-33 Examples of audit evidence the auditor can use to support each of the functions are:
a. Examine invoice from vendor
Direct confirmation with vendor
b. Physical examination
Direct confirmation with custodian
c. Direct confirmation with customer
Examine cash receipts journal and bank deposits for subsequent cash receipts
d. Examine title for ownership of asset
Examine invoice from vendor
e. Direct confirmation with vendor
Examine client's copy of vendor's statement
f. Physical examination
Examine sales invoice of subsequent sale of goods showing marked down sale price
g. Count petty cash
Direct confirmation with custodian

7-36

AUDIT PROCEDURE a.

TYPE OF
AUDIT EVIDENCE b.
BALANCE-RELATED
AUDIT OBJECTIVE
1. Test extend unit prices times quantity on the inventory list, test foot the list and compare the total to the general ledger. Reperformance Detail tie-in
2. Trace selected quantities from the inventory list to the physical inventory to make sure that it exists and the quantities are the same. Physical examination Existence and Accuracy
3. Question operating personnel about the possibility of obsolete or slow-moving inventory. Inquiry of the client Realizable value
4. Select a sample of quantities of inventory in the factory warehouse and trace each item to the inventory count sheets to determine if it has been