Answered: Which of the following statements…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Auditing Theory

1. Which of the following statements concerning audit planning is incorrect? *

A. Planning encourages the use of analytical procedures.

B. Planning facilitates supervision of team members.

C. In a recurring audit, planning often begins shortly after (or in connection with) the completion of the previous audit and continues until the completion of the current audit engagement.

D. In planning an audit, the auditor computes the materiality level and tolerable misstatement.

2. Evidence gathering in a scientific experiment is most similar to which phase of the audit? *

a. Assessing risks and designing audit procedures to address these risks.

b. Planning and supervising an engagement.

c. Evaluating whether the financial statements are fairly presented.

d. Hypothesizing that financial statements are presented fairly.

3. Which of the following statements is INCORRECT?
[S1] CPAs report on financial statements primarily because a misstatement of account balances may exist and is always corrected as a result of the independent auditor’s work.
[S2] A poorly designed internal control structure will always lead the CPA to give an adverse opinion on the financial statements. *

A. S2 only

B. S1 only

C. Neither are incorrect.

D. Both S1 and S2

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