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This set of Financial Attest Audit Manual Multiple Choice Questions & Answers (MCQs) focuses on Financial Attest Audit Manual Set 2
Q1 | The point where the total value of errors in an account becomes unacceptable to audit is called
- Unacceptable level
- Materiality level
- Qualifiable Level
- None of these
Q2 | The materiality thresholds depend on the ____ of accounts and their _____.
- Basis, Sensitivity
- Sensitivity, relativity
- Basis, accountablity
- Basis, Value
Q3 | For accounts prepared on cash basis, in respect of gross receipts/expenditure, materiality percentage would be
- For very sensitive accounts - 1 %, sensitive accounts - 1% to 2% and non sensitive accounts - 5%
- For very sensitive accounts - 1/2 %, sensitive accounts - 1/2% to 2% and non sensitive accounts - 2%
- For very sensitive accounts - 2 %, sensitive accounts - 5% and non sensitive accounts - 8%
- none of these
Q4 | Planning materiality may be taken at a lower figure than reporting materiality.
- TRUE
- FALSE
- none
- all
Q5 | Which of the following statements is true about Precision
- It is a range of error in an account between MLE & materiality
- It is a range of error in an account between MLE & AMLE
- It is a range of error in an account between Materiality & AMLE
- None of these
Q6 | AMLE in the context of likely errors is used in this stage of audit
- Reporting
- Evaluation of results
- Planning
- Field Audit
Q7 | The formula for calculating precision is
- (Materiality - Range of error possible) x AMLE
- (Materiality - AMLE) x Range of error possible
- (AMLE - Range of error possible) x Materiality
- None of these
Q8 | There is a direct relationship between materiality level and the level of audit risk
- TRUE
- FALSE
- none
- all
Q9 | The three components of Audit Risk as per the risk model are
- Inherent Risk, Control Risk, Mitigation Risk
- Inherent Risk, Control Risk, Litigation Risk
- Inherent Risk, Control Risk, Detection Risk
- None of these
Q10 | If the desired overall assurance from audit is 95%, the inherent risk is 40% and the control risk is 50%, what would be the desired assurance from substantive tests
- 90%
- 95%
- 99%
- 75%
Q11 | what are the audit procedures commonly used to obtain audit assurance?
- Analytical Procedures
- Systems Based Audit
- Direct Substantive Testing
- All of the above
Q12 | Which of the following is not a part of analytical procedures?
- System Analysis
- Economic Analysis
- Regression Analysis
- Predictive Analysis
Q13 | When you are finding out the inventory-turnover ratio, you are doing
- Comparison across components
- Comparison involving a single component
- Regression analysis
- Economic analysis
Q14 | This is a technique that creates an equation to reveal how one variable is related to one or more other variables.
- Comparison across components
- Predictive Analysis
- Regression analysis
- Economic analysis
Q15 | Which of the audit procedures is a form of inductive reasoning where the reasonableness of the aggregate results is inferred from the evidence of reliability of the individual details that are tested?
- Analytical Procedures
- Systems Based Audit
- Direct Substantive Testing
- All of the above
Q16 | Which kind of audit sampling is generally used for testing controls?
- Attribute Sampling
- Random Sampling
- Monetary Unit Sampling
- Stratified Sampling
Q17 | Which method of sampling is expected to produce representative samples?
- Block Selection
- Judgmental Sampling
- Random Sampling
- Convenient Sampling
Q18 | Which method of sampling is not expected to produce representative samples?
- Block Selection
- Random Sampling
- Systematic Sampling
- Monetary Unit Sampling
Q19 | A pre-condition for any statistical sampling is the availability of a _______
- Sampling unit
- sampling frame
- Sampling structure
- All of the above
Q20 | Population is divided into groups, each being fairly homogenous with respect to value and riskin this kind of sampling
- Block Selection
- Random Sampling
- Stratified Sampling
- Monetary Unit Sampling
Q21 | Sampling interval is calculated in this kind of sampling
- Simple Random Sampling
- Systematic Sampling
- Stratified Sampling
- All of the above
Q22 | This method of sampling is also called probability proportionate to size (PPS) sampling
- Block Selection
- Random Sampling
- Stratified Sampling
- Monetary Unit Sampling
Q23 | Extrapolation of sampling results to the population is possible in the case of Judgmental Sampling.
- TRUE
- FALSE
- none
- all
Q24 | Risk assessment is primarily a part of which of these stages in the audit process?
- Planning
- Excecution
- Reporting
- Follow up
Q25 | Reflecting all the transactions relating to the period of the accounts without regard to the actualdate of payment or receipt is also called
- Accrual system accounting
- Mercantile system of accounting
- Both
- None of these