AUDIT FINAL EXAMINATION TEST SCRIPT
2026 SOLVED QUESTIONS GUARANTEED TO
PASS
⫸ The population from which the auditor draws the sample is the
same for the existence assertion for receivables and the completeness
assertion for receivables.
True/False. Answer: False
⫸ Rapelje Sporting Goods alleges to have $410,000, net of allowance
for doubtful accounts, in its accounts receivable account; this balance
is made up of 270 total customers. If Rapelje's true balance is
$420,000 and the understated balance is due to the exclusion of a
customer's balance which balance-level assertion would be violated?
Completeness
Valuation and Allocation
Rights or Obligations
Existence. Answer: Completeness
⫸ According to AICPA (2008) guidance, which of the following is
the most important analytical procedure step for an auditor to
complete?
compare the client's reported number to the auditor's expectation
,set an acceptable deviation
generate hypotheses for significant differences
None of the above. Answer: None of the above
⫸ Independence in fact is absolutely essential to the audit, but
independence in appearance is nice to have but not essential.
True/False. Answer: False
⫸ Under which of the following circumstances will the auditor
properly disclose confidential client information to others outside of
the firm?
The disclosure is made to a peer firm that is inspecting the work of
the auditor on the engagement.
The disclosure is made to another client who invests in the audit client
whose information is being shared.
The disclosure is made to the investors through the news channels
because the client is engaged in fraud.
None of the above. The auditor should under no circumstances
disclose confidential client information to others.. Answer: The
disclosure is made to a peer firm that is inspecting the work of the
auditor on the engagement.
⫸ Vouching involves obtaining a sample from the source documents
and working toward the financial statements whereas tracing involves
, obtaining a sample from the financial statements and working toward
source documents.
True/False. Answer: False
⫸ Which of the following laws requires audited financial statements
to be filed with the SEC after the initial sale of securities?
Securities Act of 1933
None of the above
Securities Exchange Act of 1934
Sarbanes-Oxley Act. Answer: Securities Exchange Act of 1934
⫸ Which of the following best describes what is meant by the term
'risk premium'?
The highest level of risk that could be faced by an investor or creditor
The best interest rate available to the company when borrowing funds
The amount charged by an investor or lender that exceeds what they
would have charged in the absence of risk
None of the above is a definition of risk premium. Answer: The
amount charged by an investor or lender that exceeds what they
would have charged in the absence of risk
⫸ An auditor owns 2% of a diversified mutual fund, but the mutual
fund invests in one of the auditor's clients. The auditor does not
2026 SOLVED QUESTIONS GUARANTEED TO
PASS
⫸ The population from which the auditor draws the sample is the
same for the existence assertion for receivables and the completeness
assertion for receivables.
True/False. Answer: False
⫸ Rapelje Sporting Goods alleges to have $410,000, net of allowance
for doubtful accounts, in its accounts receivable account; this balance
is made up of 270 total customers. If Rapelje's true balance is
$420,000 and the understated balance is due to the exclusion of a
customer's balance which balance-level assertion would be violated?
Completeness
Valuation and Allocation
Rights or Obligations
Existence. Answer: Completeness
⫸ According to AICPA (2008) guidance, which of the following is
the most important analytical procedure step for an auditor to
complete?
compare the client's reported number to the auditor's expectation
,set an acceptable deviation
generate hypotheses for significant differences
None of the above. Answer: None of the above
⫸ Independence in fact is absolutely essential to the audit, but
independence in appearance is nice to have but not essential.
True/False. Answer: False
⫸ Under which of the following circumstances will the auditor
properly disclose confidential client information to others outside of
the firm?
The disclosure is made to a peer firm that is inspecting the work of
the auditor on the engagement.
The disclosure is made to another client who invests in the audit client
whose information is being shared.
The disclosure is made to the investors through the news channels
because the client is engaged in fraud.
None of the above. The auditor should under no circumstances
disclose confidential client information to others.. Answer: The
disclosure is made to a peer firm that is inspecting the work of the
auditor on the engagement.
⫸ Vouching involves obtaining a sample from the source documents
and working toward the financial statements whereas tracing involves
, obtaining a sample from the financial statements and working toward
source documents.
True/False. Answer: False
⫸ Which of the following laws requires audited financial statements
to be filed with the SEC after the initial sale of securities?
Securities Act of 1933
None of the above
Securities Exchange Act of 1934
Sarbanes-Oxley Act. Answer: Securities Exchange Act of 1934
⫸ Which of the following best describes what is meant by the term
'risk premium'?
The highest level of risk that could be faced by an investor or creditor
The best interest rate available to the company when borrowing funds
The amount charged by an investor or lender that exceeds what they
would have charged in the absence of risk
None of the above is a definition of risk premium. Answer: The
amount charged by an investor or lender that exceeds what they
would have charged in the absence of risk
⫸ An auditor owns 2% of a diversified mutual fund, but the mutual
fund invests in one of the auditor's clients. The auditor does not
