Which of the following statements is most closely associated with analytical procedure applied at substantive stage?

Related Mcqs:

1. Which of the following statements is most closely associated with analytical procedure applied at substantive stage?

   A. It helps to study relationship among balance sheet accounts
   B. It helps to discover material misstatements in the financial statements
   C. It helps to identify possible oversights
   D. It helps to accumulate evidence supporting the validity of a specific account balance

2. Which of the following is not an analytical procedure?

   A. Tracing of purchases recurred in the purchase book to purchase invoices.
   B. Comparing aggregate wages paid to number of employees
   C. Comparing the actual costs with standard costs
   D. All of them are analytical procedure

3. In an audit of financial statements, substantive tests are audit procedures that __________?

   A. May be eliminated for an account balance under certain conditions
   B. Are designed to discover significant subsequent events
   C. Will increase proportionately when the auditor decreases the assessed level of control risk
   D. May be test of transactions, test of balance and analytical procedures

4. Analytical procedures issued in the planning stage of an audit, generally

   A. Helps to determine the nature, timing and extent of other audit procedures
   B. Directs attention to potential risk areas
   C. Indicates important aspects of business
   D. All of the above

5. Analytical procedures issued in the planning stage of an audit, generally?

   A. helps to determine the nature, timing and extent of other audit procedures
   B. directs attention to potential risk areas
   C. indicates important aspects of business
   D. All of the above

6. What is the primary objective of analytical procedures used in the overall review stage of an audit?

   A. To help to corroborate the conclusions drawn from individual components of financial statements
   B. To reduce specific detection risk
   C. To direct attention to potential risk areas
   D. To satisfy doubts when questions arise about a client’s ability to continue

7. The nature, timing and extent of substantive procedures is related to assessed level of control risk

   A. Randomly
   B. Disproportionately
   C. Directly
   D. Inversely

8. What would most appropriately describe the risk of incorrect rejection in terms of substantive testing?

   A. The auditor concludes balance is materially correct when in actual fact it is not
   B. The auditor concludes that the balance is materially misstated when in actual fact it not
   C. The auditor has rejected an item for sample which was material
   D. None of the above

9. What would most effectively describe the risk of incorrect acceptance in terms of substantive audit testing?

   A. The auditor has ascertained that the balance is materially correct when in actual fact it is not
   B. The auditor concludes the balance is materially misstated when in actual fact is not
   C. The auditor has rejected an item from sample which was not supported by documentary evidence
   D. He applies random sampling on data which is inaccurate and inconsistent

10. Which of the following would you not use as a benchmark for comparison when undertaking analytical procedures?

    A. Other audit clients
    B. Previous years
    C. Other companies in the same industry
    D. Budget