51. 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

52. 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

53. Verification refers to_________?

A. Examining the physical existence and valuation of assets.
B. Examining the journal and ledger
C. Examination of vouchers related to assets.
D. None of the above.

54. Stock should be valued at_________?

A. Cost
B. Market price
C. Cost or Market price whichever is lower.
D. Cost less depreciation.

55. Floating assets are valued at____________?

A. cost
B. Market price
C. Cost or market price whichever is lower
D. Cost less depreciation

56. Goods sold on the basis of ‘sales or return ‘ should:

A. Be included in the stock
B. Not be included in the stock
C. Not be checked by auditor
D. None of the above

57. Of the following, which is the least persuasive type of audit evidence?

A. Bank statements obtained from the client
B. Documents obtained by auditor from third parties directly.
C. Carbon copies of sales invoices inspected by the auditor
D. Computations made by the auditor

58. Which of the following statements is, generally, correct about the reliability of audit evidence?

A. To be reliable, evidence should conclusive rather than persuasive
B. Effective internal control system provides reliable audit evidence
C. Evidence obtained from outside sources routed through the client
D. All are correct.

59. 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

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

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

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