Tag: Topic 2

Which ONE of the following constitute proper statistical sampling?

Select ONE answer:

1. Testing 100% of the items in a population
2. Testing all items with a certain characteristic
3. Testing less than 100% of the items in a population
4. Testing items NOT selected randomly from the population

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 – Testing 100% of items in a population and testing all items with a certain characteristic are not sampling, as in the former case, the whole population is tested, and in the latter case, the sample is not representative of the whole population.
4. Not correct

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Which ONE of the following statements is correct?

Select ONE answer:

1. When testing for overstatement, the assurance provider will NOT test items from the accounting records to the supporting documents
2. When testing for understatement, the assurance provider will select items from outside the accounting records and trace to the records
3. When testing for understatement, the assurance provider will test items from the accounting records to the supporting documents
4. When testing for overstatement, the assurance provider will select items from outside the accounting records and trace to the records

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 – When testing for understatement (ie, seeking to discover omissions), the assurance provider will select items from outside the accounting records and trace them to the records.
3. Not correct
4. Not correct

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

Which ONE of the following statements is correct?

Select ONE answer:

1. When testing for overstatement, the assurance provider will test items from the accounting records to the supporting documents
2. When testing for understatement, the assurance provider will test items from the accounting records to the supporting documents
3. When testing for overstatement, the assurance provider will select items from outside the accounting records and trace to the records
4. When testing for understatement, the assurance provider will select items from inside the accounting records and trace to the records

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 – When testing for overstatement (ie, seeking to discover errors), the assurance provider will test items from the accounting records to the supporting documents.
2. Not correct
3. Not correct
4. Not correct

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

Which ONE of the following statements is NOT correct?

When using analytical procedures, assurance providers should ……

Select ONE answer:

1. consider whether the information they might require will be available
2. consider the knowledge gained during previous assurance engagements
3. consider NOT using information that has been internally generated at the entity
4. consider the source of the information and whether it is reliable

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 – the assurance provider may use information that has been internally generated at the entity, provided he is satisfied that information has been properly prepared.
4. Not correct

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

According to ISA (UK) 315 “Identifying and Assessing the Risks of Material Misstatement Through Understanding of the Entity and Its Environment” and ISA (UK) 520 “Analytical Procedures”, which ONE of the following statements is correct?

Select ONE answer:

1. Analytical procedures must be used as substantive procedures
2. Analytical procedures must be used during the overall review stage of an audit
3. Analytical procedures must be carried out by junior-level assurance staff
4. Analytical procedures must be carried out by senior-level assurance staff

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 – Although it may be advisable for analytical procedures to be carried out by senior level assurance staff, this is not a requirement of ISA 520.
3. Not correct
4. Not correct

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