B. Has been properly voided. A. The total book value is known and
corresponds to the sum of all the
C. Cannot be located.
individual book values.
D. Represents an immaterial peso
B. A book value for each sample
amount.
item is known.
16. An auditor plans to examine a
C. There are some observed
sample of 20 purchase orders for
differences between audited values
proper approvals as prescribed by the
and book values.
clients internal control procedures.
One of the purchase orders in the D. The audited values are nearly
chosen sample cannot be found, and proportional to the book values.
A. Modify the planned assessed level C. Achieved upper precision limit (8%)
of control risk because the tolerable was more than the percentage of
rate plus the allowance for sampling errors in the sample (3 %).
risk exceeds the expected population D. Expected deviation rate (2 %)
deviation rate. was less than the tolerable rate (7%).
B. Accept the sample results as 21. The allowance for sampling brisk
support for the planned assessed was
level of control risk because the
sample deviation rate plus the A. 5 %.
allowance for sampling risk
exceeds the tolerable rate. B. 4 %.
36. The primary reason an auditor A. I believe that the action can
request that letters of inquiry be sent be settled for less than the
to a clients attorneys is to provide the damages claimed.
auditor with
B. I believe that the company will be
A. A description and evaluation of able to defend this action
litigation, claims, and assessment that successfully.
existed at the balance sheet date.
C. I believe that the plaintiffs case
B. The attorneys opinion of the against the company is without merit.
clients historical experiences in recent
similar litigation. D. I believe that the possible liability
to the company is nominal in amount.
C. Corroboration of the
information furnished by 40. Financial statement of an entity
management about litigation, that have been reviewed by an
claims, and assessments. accountant should be accompanied by
a report stating that a review
D. The probable outcome of asserted
claims and pending or threatened A. Provides only limited assurance that
litigation. the financial statement are fairly
presented.
37. The letter of audit inquiry should
be
Kirby Pecson Quimat, CPA Theory of Accounts - Integration Page
7
B. Includes examining, on a test basis, to present financial statement that is
information that is the representation free of material misstatements.
of management.
43. An accountant who reviews the
C. Consist principally inquiries of financial statements of an entity
company personnel and analytical should issue a report stating that a
procedures applied to financial review
data.
A. Provides less assurance than
D. Does not contemplate obtaining an audit.
corroborating evidential matter or
applying certain other procedures B. Provides negative assurance that
ordinarily performed during an audit. internal control is functioning as
designed.
41. An accountants report on an
review of the financial statements of C. Provides only limited assurance that
an entity should state that the the financial statements are fairly
accountant presented.