ACC555 Final Exam

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ACC555Final Exam1.The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 andan audited value of $1,200.Using theratio estimation technique, the estimated total audited value of the population is:A.$100,000.B.$120,000.C.$140,000.D.$144,0002The 10,000 accounts receivable of DEF Company have a total book value of $120,000.A CPA has selected and audited a sample of 100 accounts with a total book value of $1,000 andan audited value of $1,200.Using the mean-per-unit estimation technique, the estimated total audited value of the populationis:A.$100,000.B.$120,000.C.$140,000.D.$144,000.3Using the mean-per-unit estimation method an auditor has properly calculated theestimated total audited value of a population as $200,000. Her sample included 200 of thepopulation's 40,000 items. She found that, in her sample the average audited value was $1 lessthan the average book value. What was the average audited value in the sample?A.$4.B.$5.C.$6.D.$10.4Using difference estimation, an auditor has taken a sample of 200 from a population's40,000 items; that population has a book value of $200,000. She found that in her sample theaverage audited value was $4.20, while the average book value was $5.20. What is the estimatedtotal audited value of the population?A.$160,000.B.$161,538.C.$168,000.D.$200,000.5.Using ratio estimation, an auditor has taken a sample of 200 from a population's 40,000items; that population has a book value of $200,000. She found that in her sample the averageaudited value was $4.20, while the average book value was $5.20. What is the estimated totalaudited value of the population?

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A.$160,000.B.$161,538.C.$168,000.D.$200,000.6.Using mean-per-unit estimation, an auditor has taken a sample of 200 from apopulation's 40,000 items; that population has a book value of $200,000. She foundthat in hersample the average audited value was $4.20, while the average book value was $5.20. What isthe estimated total audited value of the population?A.$160,000.B.$161,538.C.$168,000.D.$200,000.7.If the projected misstatement in a nonstatistical sampling is $8,000, while the tolerablemisstatement is $9,000, what would an auditor likely conclude?A.Since the projected misstatement is less than the tolerable misstatement, the account isnot misstated.B.Since the projected misstatement is less than the tolerable misstatement, the account ismisstated.C.The risk is high that the account is materially misstated.D.The analysis has been improperly performed since the projected misstatement isunequal to the tolerable misstatement.8.A dual purpose test simultaneously.A.Addresses two different accounts.B.Functions as a substantive test and as a test of controls.C.Functions as an analytical procedure and a substantive test.D.Substantiates an ending balance and the transactions making up the balance.9.The 1000 accounts receivable of Winco Company have a total book value of $20,000(Average book value = $20). Bob Duffo, CPA, has selected and audited a sample of 50 accountswith the following mean values:1. Book value of $19.2. Audited value of $19.60.What is the estimated total audited value using mean per unit sampling?A.$19,000.B.$19,600.C.$20,000.D.$20,632.10.The 1000 accounts receivable of Winco Company have a total book value of $20,000(Average book value = $20). Bob Duffo, CPA, has selected and audited a sample of 50 accountswith the following mean values:1. Book value of $19.

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2. Audited value of $19.60.What is the estimated total audited value using difference estimation sampling?A.$19,387.B.$19,400.C.$19,600.D.$20,600.11.Which of the following is correct concerning "window dressing" for cash?A.A segregation of duties within the cash function effectively eliminates its occurrence.B.It generally involves manipulation of inventory.C.It is illegal, and an audit is designed to provide reasonable assurance of its detection.D.Many forms of it require no action by the auditors.12.Which of the following statements is not correct?A.Cash is important to the audit process because of its vulnerability to misappropriation,despite the fact that the balance at the balance sheet date may be immaterial.B.Payroll cash account balances kept on an imprest basis are more easily controlled thanothers not so kept.C.Confirmation of cash should only be performed as of the balance statement datebecause the auditor expresses an opinion as of that date.D.Reviewing interbank transfers is important to the auditor because of the possibility thatthe client may be engaged in kiting.13.The auditors use a bank cutoff statement to compare:A.Deposits in transit on the year-end cash general ledger account to deposits in the cashreceipts journal.B.Checks dated prior to year-end to the outstanding checks listed on the year-end bankreconciliation.C.Deposits listed on the cutoff statement to disbursements in the cash disbursementsjournal.D.Checks dated subsequent to year-end to the outstanding checks listed on the year-endbank statement.14.A practical and effective audit procedure for the detection of lapping is:A.Preparing an interbank transfer schedule.B.Comparing recorded cash receipts in detail against items making up the bank deposit asshown on duplicate deposit slips validated by the bank.C.Tracing recorded cash receipts to postings in customers' ledger cards.D.Preparing a proof of cash.15.Which of the following is not a control that generally is established over cashtransactions?A.Separating cash handling from recordkeeping.B.Centralizing the receipt of cash.C.Depositing each day'sreceipts intact.

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