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Which of the following auditing procedures most likely would provide assurance about a manufacturing entity's assertion of accuracy, valuation and allocation of inventory?
Testing the entity's computation of standard overhead rates.
Tracing test counts to the entity's inventory listing
Obtaining confirmation of inventories pledged under loan agreements
Reviewing shipping and receiving cut-off procedures for inventories
Which of the following is a necessary precondition for a practitioner to undertake an assurance engagement to examine and report on an entity's internal control over financial reporting?
The practitioner is a continuing auditor who previously has audited the entity's financial report.
Management agrees not to present the practitioner's report in a general-use document to shareholders.
The practitioner anticipates relying on the entity's internal control in a financial report audit.
Management presents its written assertion about the effectiveness of internal control
When restrictions are imposed by the client that significantly limit the auditor's ability to audit fixed assets (a material part of the balance sheet), the auditor generally should issue which of the following opinions?
Unmodified with an Emphasis of Matter
A written representation from a client's management which, among other matters, acknowledges responsibility for the fair presentation of the financial report, should be signed by the:
chief financial officer and the chairman of the board of directors
chairman of the audit committee of the board of directors
chief executive officer, the chairman of the board of directors, and the client's solicitor
chief executive officer and the chief financial officer
Tests designed to detect credit sales made before the end of the year that have been recorded in the subsequent year provide assurance about management's assertion of:
In determining the adequacy of the allowance for uncollectible accounts, the least reliance should be placed upon which of the following?
An ageing schedule of past due accounts.
The credit manager's opinion
Ratios calculated showing the past relationship of accounts receivable to net credit sales
Collection experience of the client's collection agency
Which combination of the following three possibilities for improving the communication effectiveness has been adopted in the revised standard form auditor’s report?
I) Giving the auditor’s opinion on the financial report greater emphasis by placing it at the beginning of the auditor’s report.
II) Allowing for changing the presentation and positioning of generically-worded paragraphs explaining the respective responsibilities of management (or those charged with governance) and of the auditor to make them more useful.
III) The auditor providing additional information about key audit matters.
II and III only
I and III only
All of I, II and III
I and II only
A representation letter issued by a client
is essential for the preparation of the audit program
does not reduce the auditor's responsibility
reduces the auditor's responsibility only to the extent that it is relied upon
is a substitute for testing
The statement that ‘nothing came to our attention which would indicate that these statements are not fairly presented’ expresses which of the following?
Disclaimer of an opinion.
In auditing accounts payable, an auditor's procedures most likely would focus primarily on management's assertion of
rights and obligations
In the examination of which of the following general ledger accounts will tests of controls be particularly appropriate?
Which of the following is not an assurance engagement?
A review of historical financial information
An audit of the effectiveness of internal control
A consulting engagement to help an organisation meet its tax obligations
A performance audit
An auditor most likely would make enquiries of production and sales personnel concerning possible obsolete or slow-moving inventory to support management's account balance assertion of
rights and obligations
accuracy, valuation and allocation
Following is a list of engagements that an assurance provider may undertake:
I) compiling financial reports
II) agreed-upon procedures
III) review of interim financial information
For which of these engagements is assurance not provided?
I and II only
Mango Ltd.’s directors voted immediately after the year-end of 30 June 2020 to triple its advertising budget for the coming year and authorised a change in advertising agencies. What is the effect of this event on the 30 June 2020 financial report?
Disclosure by means of supplemental, pro-forma financial information
Disclosure in a footnote to the financial report.
No disclosure or adjustment necessary
Adjustment of the financial report