WGU - D251 Advanced Auditing questions with verified
answers
A client made a decision to discontinue a major line of business after the balance
sheet date. How should an auditor treat this type of subsequent event ?
a. Disclose and adjust the year - end financial statements
b. Adjust the year - end financial statements
c. Disclose the information in the notes to the financial statements
d. Adjust but do not disclose the information in the year - end financial
statements Ans✓✓✓ c. Disclose the information in the notes to the financial
statements
A client made a decision to discontinue a major line of business after the balance
sheet date. How should an auditor treat this type of subsequent event? Ans✓✓✓
Disclose the information in the notes to the financial statements
A substantive audit procedure that would reveal ownership and related disclosure
issues includes scanning the cash receipts journal for relatively large inflows of
cash that from unusual sources. Ans✓✓✓ True
Accounts Payable Turnover Formula Ans✓✓✓ Purchases/Average Accounts
Payable
After identifying the risks of material misstatement, an auditor develops an audit
plan in response to those risks.
Which plan for testing revenue should the auditor implement if the auditor
believes that the control risk is high?
,a. Obtain necessary audit evidence only from tests of details
b. Obtain 60% of the necessary audit evidence from tests of controls and the
remaining 40% from substantive analytical procedures
c. Obtain 40% of the necessary audit evidence from tests of controls and t
Ans✓✓✓ a. Obtain necessary audit evidence only from tests of details
After identifying the risks of material misstatement, the auditor develops an audit
plan in response to those risks. Which of the following plans for testing revenue
would be most likely when the auditor believes that control risk is high?
a. The only evidence the auditor plans to obtain is from tests of details.
b. The auditor plans to obtain 40% of the necessary audit evidence from tests of
controls, and the remaining 60% from substantive analytical procedures.
c. The auditor plans to obtai Ans✓✓✓ a. The only evidence the auditor plans to
obtain is from tests of details.
An auditor concludes that an illegal act has been committed, the act has a
material effect on the financial statements, and the act has not been properly
disclosed. What should the auditor do?
a. Issue a waiver
b. Issue a disclaimer
,c. Issue an adverse opinion
d. Issue a limited opinion Ans✓✓✓ c. Issue an adverse opinion
An auditor concludes that an illegal act has been committed, the act has a
material effect on the financial statements, and the act has not been properly
disclosed.What should the auditor do? Ans✓✓✓ Issue an adverse opinion
An auditor determines overall materiality of $500,000 would be material to the
income statement and $1,000,000 would be material to the balance sheet. Which
amount would an auditor typically assess performance materiality to be for this
client?
a. $1,000,000
b. 75% of $1,000,000
c. 75% of $500,000
d. $500,000 Ans✓✓✓ c. 75% of $500,00
An auditor determines overall materiality of $500,000 would be material to the
income statement and $1,000,000 would be material to the balance sheet. Which
amount would an auditor typically assess performance materiality to be for this
client? Ans✓✓✓ 75% of $500,000
An auditor has determined performance materiality has been set too high at the
beginning of the audit. Which procedures should this auditor consider to detect
misstatements?
a. The auditor should perform additional substantive audit procedures
, b. The auditor should perform additional control audit procedures.
c. The auditor should perform fewer control audit procedures
d. The auditor should perform fewer substantive procedures Ans✓✓✓ a. The
auditor should perform additional substantive audit procedures
An auditor has determined performance materiality has been set too high at the
beginning of the audit. Which procedures should this auditor consider to detect
misstatements? Ans✓✓✓ The auditor should perform additional substantive
audit procedures.
An auditor is reviewing the shipping policy of a large supply company . The title to
goods shipped is not changed until the retailer sells the goods to their customers.
Which primary concern should the auditor have about this practice?
a. The projected volume of the client's inventory to be sold at the retailer's
location
b. The staging of the client's inventory at the retailer's location
c. The amount of the client's inventory stored at the retailer's location
d. The marketing strategy to Ans✓✓✓ c. The amount of the client's inventory
stored at the retailer's location
An auditor is reviewing the shipping policy of a large supply company. The title to
goods shipped is not changed until the retailer sells the goods to their customers.
Which primary concern should the auditor have about this practice? Ans✓✓✓
The amount of the client's inventory stored at the retailer's location
An auditor performs tests of controls in the revenue cycle. First, the auditor
makes inquiries of company personnel about credit-granting policies. The auditor
answers
A client made a decision to discontinue a major line of business after the balance
sheet date. How should an auditor treat this type of subsequent event ?
a. Disclose and adjust the year - end financial statements
b. Adjust the year - end financial statements
c. Disclose the information in the notes to the financial statements
d. Adjust but do not disclose the information in the year - end financial
statements Ans✓✓✓ c. Disclose the information in the notes to the financial
statements
A client made a decision to discontinue a major line of business after the balance
sheet date. How should an auditor treat this type of subsequent event? Ans✓✓✓
Disclose the information in the notes to the financial statements
A substantive audit procedure that would reveal ownership and related disclosure
issues includes scanning the cash receipts journal for relatively large inflows of
cash that from unusual sources. Ans✓✓✓ True
Accounts Payable Turnover Formula Ans✓✓✓ Purchases/Average Accounts
Payable
After identifying the risks of material misstatement, an auditor develops an audit
plan in response to those risks.
Which plan for testing revenue should the auditor implement if the auditor
believes that the control risk is high?
,a. Obtain necessary audit evidence only from tests of details
b. Obtain 60% of the necessary audit evidence from tests of controls and the
remaining 40% from substantive analytical procedures
c. Obtain 40% of the necessary audit evidence from tests of controls and t
Ans✓✓✓ a. Obtain necessary audit evidence only from tests of details
After identifying the risks of material misstatement, the auditor develops an audit
plan in response to those risks. Which of the following plans for testing revenue
would be most likely when the auditor believes that control risk is high?
a. The only evidence the auditor plans to obtain is from tests of details.
b. The auditor plans to obtain 40% of the necessary audit evidence from tests of
controls, and the remaining 60% from substantive analytical procedures.
c. The auditor plans to obtai Ans✓✓✓ a. The only evidence the auditor plans to
obtain is from tests of details.
An auditor concludes that an illegal act has been committed, the act has a
material effect on the financial statements, and the act has not been properly
disclosed. What should the auditor do?
a. Issue a waiver
b. Issue a disclaimer
,c. Issue an adverse opinion
d. Issue a limited opinion Ans✓✓✓ c. Issue an adverse opinion
An auditor concludes that an illegal act has been committed, the act has a
material effect on the financial statements, and the act has not been properly
disclosed.What should the auditor do? Ans✓✓✓ Issue an adverse opinion
An auditor determines overall materiality of $500,000 would be material to the
income statement and $1,000,000 would be material to the balance sheet. Which
amount would an auditor typically assess performance materiality to be for this
client?
a. $1,000,000
b. 75% of $1,000,000
c. 75% of $500,000
d. $500,000 Ans✓✓✓ c. 75% of $500,00
An auditor determines overall materiality of $500,000 would be material to the
income statement and $1,000,000 would be material to the balance sheet. Which
amount would an auditor typically assess performance materiality to be for this
client? Ans✓✓✓ 75% of $500,000
An auditor has determined performance materiality has been set too high at the
beginning of the audit. Which procedures should this auditor consider to detect
misstatements?
a. The auditor should perform additional substantive audit procedures
, b. The auditor should perform additional control audit procedures.
c. The auditor should perform fewer control audit procedures
d. The auditor should perform fewer substantive procedures Ans✓✓✓ a. The
auditor should perform additional substantive audit procedures
An auditor has determined performance materiality has been set too high at the
beginning of the audit. Which procedures should this auditor consider to detect
misstatements? Ans✓✓✓ The auditor should perform additional substantive
audit procedures.
An auditor is reviewing the shipping policy of a large supply company . The title to
goods shipped is not changed until the retailer sells the goods to their customers.
Which primary concern should the auditor have about this practice?
a. The projected volume of the client's inventory to be sold at the retailer's
location
b. The staging of the client's inventory at the retailer's location
c. The amount of the client's inventory stored at the retailer's location
d. The marketing strategy to Ans✓✓✓ c. The amount of the client's inventory
stored at the retailer's location
An auditor is reviewing the shipping policy of a large supply company. The title to
goods shipped is not changed until the retailer sells the goods to their customers.
Which primary concern should the auditor have about this practice? Ans✓✓✓
The amount of the client's inventory stored at the retailer's location
An auditor performs tests of controls in the revenue cycle. First, the auditor
makes inquiries of company personnel about credit-granting policies. The auditor
