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F8 – Revision Test – Questions

Question 1 Which of the following is a test of control and which a substantive test?!

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Question 2 Total assets = $10m. !

What is the preliminary estimation of materiality?!

Question 3 If a preliminary estimation of materiality is $2m, is performance materiality more likely to be $1m or $3m?!

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ToC ST20 purchase invoices for expenses amounts are traced to debit entries in the appropriate nominal ledger accounts.

Expenses are compared to similar expenses in the previous year.20 purchase invoices are inspected to see if they had been stamped ‘Approved for payment’ by the chief accountant

20 cars are inspected to see if they exist15 Capital expenditure authorisations for purchases over $1,000 are inspected to see if they have been signed-off by the finance director15 capital expenditure invoices are traced to the appropriate non-current asset and VAT accounts

Depreciation calculations are re-performed by the auditor10 Records in the fixed asset register are inspected to verify that they were physically inspected within the last 12 months.

The receipt of goods into the factory is observed to ensure that deliveries are counted by staff upon receipt

The auditor inspects inventory to see if any appears damaged.

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Question 4 An internal control system is found not to be operating effectively. !

Which of the following is the appropriate audit response?!

(a)! Carry out more tests of control!(b)! Carry out more substantive tests!!

Question 5 Which three of the following terms are the odd ones out?!

Honesty, objectivity, confidentiality, independence, secrecy, professional competence and due care, professional behaviour, integrity!

Question 6 The question “Can non-current assets be bought without proper authorisation?” is an example of:!

(a)! A control objective!(b) ! A control procedure!!and would the question be found on an:!

(a)! ICQ!

(b)! ICEQ?!

Question 7 What are the preconditions of an audit?!!(a)!!(b)! !!

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Question 8 Are the following methods of sampling statistical or non-statistical?!

Question 9 Fill in the blanks:!

Question 10 What are the 5 elements of an assurance engagement?!

(a)!(b)!(c)!(d)!(e)!

Internal auditors External auditors

Report to?

Employed by?

Work determined by?

Purpose of work?

Statistical Non-statistical

Block sampling

Monetary unit sampling

Random sampling

Haphazard sampling

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Question 11 Indicate the relevance of the following list of assertions to the audit of account balances, transactions and events, and presentation and disclosure:!

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Question 12 Is the following statement true or false?!

“A contingent liability is caused by a future event.”!

Question 13 What is wrong with the following description of an audit procedure?!

“Inspect the cash book for amounts received after year end in respect of amounts owing at year end.”!

Question 14 Could a sharp fall in sales after year end be an adjusting event?!

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Period end balances

Transactions and events

Presentation and disclosure

Accuracy

Completeness

Cut-off

Allocation

Existence

Classification

Occurrence

Valuation

Rights and obligations