The Multiple Choice Questions Blog

To gather sufficient and appropriate evidence, the auditor may use external confirmation requests.

For the statement below, select whether it is true, false, it depends on the size of the business, or you should consult a senior colleague

• A sample of confirmation requests drawn from the client’s list of balances is more appropriate for receivables than for payables.

Select ONE answer:

1. False
2. True
3. Depends on the size of the business
4. Consult a senior colleague

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – True => receivables are tested for overstatement therefore it is acceptable to select the sample from the client’s list of balances. The direct confirmation would be likely to elicit a response (even if negative confirmation is used) if the balance is indeed overstated. However, payables are tested for understatement and the auditor is looking for balances which are not on the client’s list but should be. Therefore, this sample should be drawn from a list of all possible payables, not from the client’s list, which may already be understated.
3. Not correct
4. Not correct

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To gather sufficient and appropriate evidence, the auditor may use external confirmation requests.

For the statement below, select whether it is true, false, it depends on the size of the business, or you should consult a senior colleague

• A positive confirmation request always asks respondents to reply to the auditor to indicate whether they agree with the information provided.

Select ONE answer:

1. False
2. True
3. Depends on the size of the business
4. Consult a senior colleague

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – False => a positive confirmation may take two forms: requesting a response indicating whether they agree or disagree with the information provided, or requesting the recipient to state the amount owed by/to them.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

The following is an example of a test that an assurance firm might use at the gathering-evidence stage of an assignment.

For the example below, select the type of procedure that the test illustrates.

• Using computer-assisted audit tools (CAATs) to check the ageing of the year-end list of aged receivables

Select ONE answer:

1. Discussion
2. Confirmation
3. Recalculation
4. Reperformance

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – Reperformance is the auditor’s independent execution of procedures or controls which were originally performed as part of the entity’s internal control, therefore using CAATs to check the ageing of the year-end list of aged receivables is a reperformance of that ageing analysis, which is itself a control over the recoverability of receivables.

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The following is an example of a test that an assurance firm might use at the gathering-evidence stage of an assignment.

For the example below, select the type of procedure that the test illustrates.

• Adding the list of year-end receivables

Select ONE answer:

1. Discussion
2. Confirmation
3. Recalculation
4. Reperformance

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – Recalculation consists of checking the mathematical accuracy of documents or records, therefore casting the list of year-end receivables is a recalculation procedure.
4. Not correct

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Two types of procedures used in gathering evidence are tests of controls and substantive procedures.

For the following example, select the type of procedure that is illustrated below.

• Comparing this year’s sales figures to those of previous years

Select ONE answer:

1. Test of control
2. Substantive procedure
3. Depends on the size of the business
4. Consult a senior colleague

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – Substantive procedure – remembering that substantive procedures include analytical procedures, which is what this describes
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.