SOLVED

11) Risk assessment procedures are performed by auditors during an audit in order to: A) determine the risk of material misstatement in the financial statements. B) determine the amount of testing of internal control. C) determine the extent of testing of details of balances. D) determine the extent of testing of transactions. 12) Tests of controls are directed toward the control’s: A) efficiency. B) effectiveness. C) efficiency and effectiveness. D) cost benefit ratio. 13) A procedure designed to test for monetary misstatements directly affecting the correctness of financial statement balances is a: A) test of controls. B) substantive test. C) test of attributes. D) monetary-unit sampling test. 14) Which of the following is not a direct result of performing analytical procedures? A) identify areas of potential misstatements B) reduce detailed audit tests C) understand the client’s business D) identify specific errors in the accounts 15) The primary emphasis in most tests of details of balances is on the: A) balance sheet accounts. B) revenue accounts. C) cash flow statement accounts. D) expense accounts. 16) Which of the following statements is not true? A) Analytical procedures emphasize the overall reasonableness of transactions and balances. B) Tests of controls are concerned with evaluating whether controls are sufficiently effective to justify reducing control risk and thereby reducing analytical review procedures. C) Substantive tests of transactions emphasize the verification of transactions recorded in the journals and then posted in the general ledger. D) Tests of details of balances emphasize the ending balances in the general ledger. 17) Many auditors perform extensive analytical procedures on audits because: A) they are required by GAAS. B) they pinpoint errors in accounts. C) they indicate areas of potential risk and misstatement. D) they are required for tests of controls. 18) When controls are deemed ineffective and assessed control risk is at the maximum for a private company, which of the following would normally be true? A) no emphasis placed on the controls B) relatively little emphasis placed on the controls C) moderate emphasis placed on the controls D) heavy emphasis placed on the controls 19) Which of the following is ordinarily designed to detect material dollar errors on the financial statements? A) Tests of controls B) Analytical review procedures C) Computer controls D) Tests of details of balances