COLEGIO DE DAGUPAN AUDITING THEORY

Arellano St., Dagupan City Quiz 1 (Finals)

School of Business and Accountancy 2nd Semester (2017-2018)

1. Which of the following is not a source document for the revenue cycle?

A. Sales order
B. Receiving report
C. Credit memo
D. Delivery receipt

2. Which of the following activities is not part of the revenue cycle?

A. Sales order entry

B. Receiving
C. Billing
D. Shipping

3. In the revenue cycle, a customer places an order for a certain product. What step should be taken before the
order is checked for inventory availability?

A. A packing list should be generated for the warehouse.

B. The customer’s credit should be checked for a sale on account.
C. The sales order should be created and written to a file.
D. The shipping department should be notified of an order in process.

4. ____________ is the maximum allowable account balance for a given customer.

A. Credit limit
B. Reorder point
C. Credit checkpoint
D. Backorder point

5. An essential part of the revenue cycle is filling customer orders and shipping goods to customers. Automating
warehouse system cut costs. Improve efficiency, and enable more customer-responsive shipments. Which of
the following elements is required for an automated perpetual inventory system?

A. Forklifts
B. Conveyor belts
C. Bar-code scanner
D. Van

6. The basic document created in the billing process is the

A. Bill of lading
B. Purchase order
C. Sales invoice
D. Packing list
7. To ensure proper segregation of duties, who should make decisions concerning issuance of credit memos?

A. Warehouse manager
B. Credit manager
C. Cashier
D. Accounts receivable supervisor

8. Which of the following is not an objective of the revenue/receipt cycle?

A. Received goods are counted and inspected for quality.

B. Custody over assets resulting from the revenue/receipt cycle is properly maintained.
C. Transactions related to the revenue/receipt cycle are properly authorized, executed, and recorded.
D. Approved sakes order are shipped on a timely basis and accordance with customer specifications.

9. The following are directly involved in the revenue/receipt cycle, except

A. Treasurer and controller

 B. Receiving department clerk
C. Billing clerk
D. Sales manager and the credit manager

10. Which of the following controls most likely would provide reasonable assurance that all credit sales
transactions of an entity are recorded?

A. The accounting department supervisor controls the mailing of monthly statement to customer and
investigates any differences reported by customers.
B. The accounting department supervisor independently reconciles, on a monthly basis, the accounts
receivable subsidiary ledger to the accounts receivable control account.
C. The billing department supervisor matches prenumbered shipping documents with entries in the
sales journal.
D. The billing department supervisor sends copies of approved sales orders to the credit department for
comparison to authorized credit limits and current customer account balances.

11. For effective internal control, employees maintaining the accounts receivable subsidiary ledger should not
also approve

A. Cash disbursements.
B. Write-offs of Customer accounts.
C. Granting of credit to customers.
D. Employee overtime wages.

12. A sound internal control procedure should require that defective merchandise returned by customers be
presented initially to the

A. Receiving clerk
B. Accounts receivable supervisor
C. Billing clerk
D. Shipping department supervisor

13. An employee misappropriates cash receipts from sales on account. Which of the following acts would
conceal this defalcation and be least likely to be detected by an auditor?

A. Understating the cash receipts journal.

B. Overstating the accounts receivable subsidiary ledger.
C. Overstating the accounts receivable control account
D. Understating the sales journal.

Questions 14 through 17 are based on the following information:

In connection with your audit of the financial statement of Tanya Company, you gathered the following
information about its sales procedures:

Customer orders are received by the sales-order department. A clerk computes the peso amount of the order and
sends it to the credit department for approval. Credit approval is stamped on the order and returned to the sales-
order is filed in the customer order file.

The customer copy of the sales invoice is sent to the billing department and held in the pending file awaiting
notification that the order has been shipped.

The shipping copy of the sales invoice is routed through the warehouse and the shipping department as authority
for the respective departments to release and ship the goods.

Shipping department personnel pack the order and prepare a three-copy bill of lading:
Original copy --- mailed to customer
Second copy --- sent with the shipment
Third copy --- filed in sequence in the bill of lading file

The shipping copy of the sales invoice is sent to the billing department.

The billing clerk matches the received shipping copy of the sales invoice with the customer copy from the
pending file.
The customer copy is then mailed to the customer, and the shipping copy is sent to the accounts receivable clerk.
The accounts receivable clerk enters the sales invoice data in the sales journal, posts the customer’s account in the
accounts receivable subsidiary ledger, and files the shipping copy in the sales invoice file. The invoices are
numbered and filed in sequence.

14. To obtain evidence concerning the proper credit approval of sales, the auditor would select a sample of
transaction documents from the population presented by the

A. Bill of lading file

B. Accounts receivable subsidiary ledger.
C. Sales invoice file.
D. Customer order file.

15. In determining whether the internal control operated effectively to minimize errors of failure to post sales
invoices to the accounts receivable subsidiary ledger, the auditor should select a sample of transactions from
the population represented by the

A. Sales invoice file

B. Accounts receivable subsidiary ledger.
C. Customer order file.
D. Bill of lading file.

16. To effectively determine whether the entity’s control activities minimize errors of failure to invoice goods
that have been shipped, the auditor should select a sample of transactions from the population represented by
the

A. Sales invoice file.

B. Bill of lading file.
C. Accounts receivable subsidiary ledger
D. Customer order file.

17. To obtain evidence that uncollected items in customers’ accounts represented valid trade receivable, the
auditor should select a sample of items from the population represented by the

A. Bill of lading file.

B. Customer order file.
C. Accounts receivable subsidiary ledger.
D. Sales invoice file.

18. Which of the following most likely would be the result of ineffective controls in the revenue/receipt cycle?

A. Omission of shipping documents could go undetected, causing an understatement of inventories.

B. Irregularities in recording transaction in the subsidiary accounts could result in a delay in goods shipped.
C. Final authorization of credit memos by sales department personnel could permit an employee
defalcation scheme.
D. Fictious transaction could be recorded causing an understatement of revenues and an overstatement of
receivables.

19. At which point in an ordinary sales transaction of a wholesaling business is a lack of specific authorization of
least concern to the auditor in performing risk assessment procedures?

A. Granting of credit
B. Determination of discounts
C. Selling of goods for cash
D. Shipment of goods

20. Samantha Company uses its sales invoices for posting perpetual inventory records. Inadequate internal control
over the invoicing function allows goods to be shipped but not invoiced. The inadequate controls could cause
what type of misstatement in each of the following accounts?

Revenues Receivable Inventories

A. Understatement Understatement Understatement
B. Overstatement Overstatement Understatement
C. Understatement Understatement Overstatement
D. Overstatement Overstatement Overstatement

21. Which of the following controls is often lacking in a retail cash sales environment?

A. Segregation of function
 B. Competent personnel
C. Monitoring
D. Access to assets limited to authorized personnel

22. An auditor’s risk assessment procedures disclosed that the accounts receivable clerk approves credit memos
and has access to cash. Which of the following controls would be most effective in offsetting this weakness?

A. The controller reconciles accounts to the amount shown in ledger.

B. The owner reviews credit memos after they are recorded.
C. The controller receives the monthly bank statement directly and reconciles the cash accounts.
D. The owner reviews errors in billing to customers and postings to the subsidiary ledger.

23. The following controls are ordinarily found in an entity’s revenue/receipt cycle. Which control most likely
would be effective in offsetting the tendency of sales personnel to maximize sales volume at the expenses of
high bad debt write-offs?

A. Employees responsible for authorizing sales and bad debts write-offs are denied access to cash.
B. Subsidiary account receivable ledgers are reconciled to the control account by an employee independent
of the authorization of credit.
C. Employees involved in the credit-granting function are separated from the sales function.
D. Shipping documents and sales invoices are matched by an employee who does not authorize write-offs
of customers’ accounts.

24. Which of the following control activities in an entity’s revenue/receipt cycle would provide reasonable
assurance that all billed sales are correctly posted to the accounts receivable ledger?

A. Each shipment of goods on credit is supported by a prenumbered sales invoice.

B. The accounts receivable subsidiary ledger is reconciled daily to the accounts receivable control account
in general ledger.
C. Daily sales summaries are compared to daily posting to the accounts receivable ledger.
D. Each sales invoice is supported by a pre-numbered shipping document.

25. Which of the following tests of controls would most likely be performed by an auditor to obtain evidence
about management’s assertion concerning the completeness of sales transactions?

A. Inquiries about the entity’s credit granting policies and whether credit checks are consistently applied.
B. Inspect the entity’s reports of prenumbered shipping documents that have not been recorded in
the sales journal.
C. Compare prices on prenumbered sales invoices to the entity’s authorized price list.
D. Verify the extensions and footings on sales invoices and monthly statements of customers’ accounts
have been checked.

26. An online sales order processing system most likely would have an advantage over a batch sales order
processing system by

A. Enabling shipment of customer orders to be initiated as the orders are received.

B. Maintaining more accurate records of accounts receivable and inventories.
C. Maintaining backup copies of the database.
D. Detecting errors in the data entry process by the use of edit checks.

27. When an office supply company is unable to fill an order completely, it marks the out-of-stock items as back
ordered on the customer’s order form and enters these items in a back order file that can be viewed or printed
by management. Customers are becoming dissatisfied with the company because of its failure to keep track
of and ship out-of-stock items as soon as they are available. Which of the following is the best approach to
ensure prompt delivery of out-of-stock items?

A. Increase inventory levels to minimize the occurrence of stock outs.

B. Match the back order file to goods received daily
C. Reconcile the sum of filled and back orders with the total of all orders placed daily.
D. Implemented electronic data interchange (EDI) with supply vendors to decrease the time to replenish
inventory.
28. PSA315 (Identifying and Assessing the Risks of Material Misstatement through Understanding the
Entity and its Environment) requires the auditor to perform risk assessment procedures at

A. The financial statement level only.

B. The assertion level only.
C. The financial statement level and the assertion level for classes of transactions, account balances
and disclosure.
 D. Either the financial statement of assertion level.

29. The auditor’s risk assessment procedures should always include the following, except

A. Inquiries of management and of others within the entity.

B. Analytical procedures.
C. Observation and inspection.
D. Substantive test procedures and tests of controls.

30. The auditor’s risk assessment procedures

A. By themselves, do not provide sufficient appropriate audit evidence on which to base the audit
opinion.
B. Should not consider information obtained from the auditor’s previous experience with the entity.
C. Are designed to detect material misstatements at the assertion level for classes of transactions, account
balances and disclosures.
D. Are designed to test the effectiveness of the entity’s controls.

31. The auditor should obtain an understanding of the entity’s objectives and strategies, and those business
risks that may result in risk of material misstatement. Which of the following statement concerning the
entity’s business risk is incorrect?

A. Business risk is broader than the risk of material misstatement of the financial statements, though it
includes the latter.
B. An understanding of the business risk facing the entity increases the likelihood of identifying risks of
material misstatement.
C. The auditor has a responsibility to identify or assess all business risk.
D. Business risk may arise from the development of new products or services that may fail.

32. The risk that the auditor may give an inappropriate opinion when the financial statements are materially
misstated is called

A. Detection risk
B. Business risk
C. Audit risk
D. Inherent risk

33. Audit risk has three components: inherent risk, control risk, and detection risk. Which is correct?

A. Detection risk is a function of the efficiency of an auditing procedure.

B. Cash is more susceptible to theft than an inventory of coal because it has a greater inherent risk.
C. The risk that material misstatements will not be prevented or detected on a timely basis by internal
control can be reduced to zero by effective controls.
D. The existing levels of inherent risk, control risk, and detection risk can be changed at the discretion of
the auditor.

34. The risk that an auditor’s substantive procedures will lead to the conclusion that a material misstatement
does not exist in an account balance or transaction class when, in fact such misstatement does exist is

A. Control risk
B. Inherent risk
C. Audit risk
D. Detection risk

35. The existence of audit risk is recognized by the statement in the auditor’s report that the

A. Financial statements are presented fairly, in all material respects, in accordance with Philippine
Financial reporting Standards.
B. Audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial
statements.
C. Auditor obtains reasonable assurance about whether the financial statements are free of
material misstatement.
D. Auditor is responsible for expressing an opinion on the financial state4ments, which are management’s
responsibility.

36. Which of the following audit risk components may be assessed in quantitative terms?
 Inherent Risk Control Risk Detection Risk
A. Yes No Yes
B. Yes Yes Yes
C. No No No
D. No No Yes

37. Some account balances, such as those for retirement benefits and financial leases, are the results of
complex calculations. The susceptibility to material misstatements in these types of accounts is referred
to as

A. Audit risk
B. Detection risk
C. Inherent risk
D. Control risk

38. There is an inverse relationship that exists between the acceptable level of detection risk and the

A. Risk of failing to discover material misstatements.

B. Assurance provided by substantive tests.
C. Preliminary judgments about materiality levels.
D. Risk of misapplying audit procedures.

39. Which of the following statements concerning audit risk and its components is incorrect?

A. Regardless of the assessed levels of inherent and control risks, the auditor should always perform some
substantive procedures for material account balances and classes of transactions.
B. The higher the assessment of inherent and control risks, the more evidence the auditor should obtain
from the performance of substantive procedures.
C. The assessed level of inherent risk need not to be considered in determining the nature, timing,
and extent of substantive procedures required to reduce audit risk to an acceptably low level.
D. After obtaining an understanding of the accounting and internal control systems, the auditor should
make a preliminary assessment of control risk, at the assertion level, for each material account balance
or class of transactions.

40. Because the concepts of audit risk and materiality are interrelated, they must be considered together by
the auditor. Which of the following statement is correct?

A. The Phrase in the auditor’s report “present fairly, in all material respects, in accordance with
Philippine Financial Reporting Standards“ indicates the auditor’s belief that the financial
statements taken as a whole are not materially misstated.
B. If misstatement are not individually material, but are material when aggregated with other
misstatements, the concept of the materiality does not apply.
C. Audit risk is the risk that an auditor may unknowingly modify his/her opinion when, in fact, the
financial statements are fairly presented.
D. Only material errors cause financial statements to be materially misstated.

41. The statements below describe the interrelationship of audit risk components. Which is false?

A. There is an inverse relationship between detection risks and the combined level of inherent and control
risk.
B. When inherent control risks are high, the acceptable level of the detection risk needs to be low to
reduce audit risk to an acceptably low level.
C. When inherent and control risks are low, an auditor can accept a higher detection risk and still reduce
audit risk to an acceptably low level.
D. The assessed level of inherent and control risks can be sufficiency low to eliminate the need for
the auditor to perform any substantive procedures.

42. When considering the factors that affect the risk of material misstatement, the auditor should consider

I. The magnitude of misstatement that might occur.

II. The likelihood of misstatement that might occur.
III. That internal control weaknesses have some effect on the financial statements.

A. I and II only C. II. And III only.

B. I and III only D. I, II and III.

43. A basic premise underlying analytical procedures is that

 A. Plausible relationships among data may reasonably be expected to exist and continue in the
absence of known conditions to the contrary.
B. These procedures cannot replace tests of details of transactions and balances.
C. Statistical tests of financial information may lead to the detection of material misstatements in the
financial statements.
D. The study of financial ratios is an acceptable alternative to the investigation of unusual fluctuations.

44. For all audits of financial statements conducted in accordance with PSAs, the use of analytical
procedures is require to some extent.

A B C D
As a risk assessment procedure
in the planning phase Yes Yes Yes No
As a substantives test procedure
In the overall review of the Yes No No Yes
Financial statements. Yes Yes No Yes

45. Which of the following statements concerning analytical procedures is true?

A. Analytical procedures are more efficient, but not more effective, than tests of details of transactions.
B. Analytical procedure used as risk assessment procedures use data aggregated at a high level.
C. Analytical procedure can replace tests of controls in gathering audit evidence to support assessed of
control risk.
D. Analytical procedure usually involves comparisons of ratios developed from recorded amounts with
ratios developed by management.

46. Analytical procedures used in planning an audit should focus on

A. Enhancing the auditor’s understanding of the client’s business.

B. Evaluating the adequacy of evidence gathered concerning unusual balances.
C. Identifying significant deficiencies in internal control.
D. Testing individual account balances that depend on accounting estimates.

47. Analytical procedures performed in the

A. Planning stage of the audit should assist in assessing the validity of the conclusions reached.
B. Planning stage of the audit should address the risk of material misstatement of revenue due to
fraudulent financial reporting.
C. Financial review stage of the audit should achieve audit objectives related specific assertions in the
financial statements.
D. Financial review stage of the audit should focus in identifying specific risk.

48. An auditor obtains an understanding of the nature of the entity to

A. Make constructive suggestions concerning improvements in the client’s internal control.

B. Understand the account balances, transactions, and disclosures in the financial statements.
C. Develop an attitude of professional skepticism concerning management’s financial statement
assertion’s
D. Evaluate whether the aggregation of known misstatements causes the financial statements taken as a
whole to be materially misstated.

49. It is the process designed, implemented and maintained by those charge with governance, management,
and other personnel to provide reasonable about the achievement of the entity’s objectives.

A. Internal auditing
B. Internal control
C. Business strategy
D. Accounting process

50. Which of the following statements concerning internal control is incorrect?

A. Internal control is affected by people.

B. Internal control is expected to provide absolute assurance.
C. Internal control is a process.
D. Internal control is geared to achieving objectives in the overlapping categories of financial reporting,
compliance and operations.

51. The inherent limitations in an entity’s internal control system include

 I. Collusions among individuals
II. Breakdowns in established controls.
III. Mistakes in judgment.

A. I and III only C. II and III only

B. I and II only D. I, II and III

52. The procedures performed to obtain an understanding of an internal control system provide an auditor
with

A. Sufficient appropriate evidence to use in forming an overall opinion on the entity’s financial
statements.
B. Enough understanding to design procedures to gather sufficient appropriate audit evidence.
C. Enough understanding to express an opinion on the effectiveness of the entity’s internal control
system.
D. Audit evidence to use in forming an overall opinion on the entity.

53. Some inherent limitations in an entity’s internal control system include

I. The possibility of management overriding the internal control in place for illegitimate purposes.
II. Collusion among employees to conceal fraud.
III. Mistakes in judgment as the result of inadequate information or time pressures.

A. I and II only C. II and III only

B. I and II only D. I, II and III

54. When considering an entity’s internal control system, an auditor is not required to

A. Search for significant deficiencies in the operation of the internal control system.
B. Understand the components of the entity’s internal control system.
C. Determine whether relevant controls have been placed in operation.
D. Perform procedures to understand the design of the internal control system policies.

55. The following are components of internal control, except

A. Control activities
B. The entity’s risk assessment process
C. Control environment
D. Business risk

56. An entity’s internal control system contains manual elements and often contains automated elements. Manual
elements in internal control may be less reliable than automated elements because

A. Manual control elements can be more easily bypassed, ignored or overridden and they are also
more prone to simple errors and mistakes.
B. Manual control elements facilitate the additional analysis of information.
C. Consistency of application of manual control elements can always be assumed.
D. Manual control elements include reliance on systems or programs that are inaccurately processing
data, processing inaccurate data, or both.

57. IT benefits an entity’s internal control by enabling an entity to

A. Reduce the risk that controls will be circulated.

B. Process large, unusual or non- recurring transactions.
C. Rely on systems or programs that are inaccurately processing data.
D. Allow unauthorized changes to date in master files.

58. When obtaining an understanding of controls that are relevant to the audit, the auditor is required to

A. Evaluate the design of those controls.

B. Determine whether those controls have been implemented.
C. Evaluate the design of those controls and determine whether they have been implemented.
D. Evaluate the design of those controls and determine whether they have been implemented by
performing tests of controls.

59. This internal control component is the foundation for all other components. It sets the tone of the
organization, provides discipline and structure, and influences the control consciousness of employees.
 A. Control activities.
B. Monitoring of controls.
C. Control environment.
D. The entity’s risk assessment process

60. Which of the following are considered control environment elements?

Commitment Detection risk Organizational

To Competence Risk Structure
A. No Yes No
B. Yes Yes Yes
C. Yes No Yes
D. No No Yes

61. The following controls are appropriate for property, plant, and equipment (PPE), except

A. Written policies for capitalization and expenditure and review of application of depreciation methods.
B. Disposal of fully depreciated PPE items.
C. Proper authority for acquisition and retirement of PPE items.
D. Detailed PPE records and physical controls over PPE items.

62. The question that an auditor would likely least include on an internal control questionnaire concerning the
initiation and execution of equipment transactions is

A. Are requests for purchases of equipment reviewed for consideration of soliciting competitive bids?
B. Are request for major repairs approved at a higher level than the department initiating the request?
C. Are procedures in places to monitor and properly restrict access to equipment?
D. Are prenumbered purchase orders used for equipment and periodically accounted for?

63. Which of the following controls would most likely detect equipment acquisition that are mis classified as
maintenance expense?

A. Segregation of duties of employees in the accounts payable department.

B. Authorization by the board of directors of significant equipment acquisitions.
C. Independent verification of invoices for disbursements recorded as equipment acquisitions.
D. Investigation of variances within a formal budgeting system.

64. Which of the following control activities is most likely to prevent the improper disposition of equipment?

A. A periodic analysis of the scrap sales and the repairs and maintenance accounts.
B. Periodic comparison of removal work orders with authorizing documentation.
C. The use of serial numbers to identify equipment that could be sold.
D. A separation of duties between those authorized to dispose of equipment and those authorized to
approve removal work orders.

65. Which of the following control activities most likely would justify a reduced level of control risk concerning
property, plant, and equipment (PPE) acquisitions?

A. Periodic physical inspection of PPE by the internal audit staff.

B. Approval of periodic depreciation entries by a supervisor independent of the accounting department.
C. The review of prenumbered purchase orders to detect unrecorded trade-ins.
D. Comparison of current-year PPE account balances with prior-year figures.

66. An Internal control objective concerning property, plant and equipment (PPE) acquisition is that they be
recorded at the correct amounts and in the proper period, and properly classified. In which of the following
conditions would an auditor most likely assess a high level risk of material misstatement?

A. All material acquisitions of PPE are required to be approved by the board of directors.
B. Most additions are self-constructed by the entity.
C. Recently acquired loans include covenants that preclude further plant acquisitions for 5 years.
D. Gross PPE increase 30% during the current period.
67. Why is property, plant and equipment (PPE) typically considered to be one of the accounts least susceptible to
fraud?

A. Internal control on this account is inherently effective.

B. The depreciated values are always smaller than cost.
C. The inherent risk of PPE is usually low.
 D. For most companies, the recorded amounts of PPE are immaterial.

68. Which of the following misstatement or questionable practices may be uncovered if an auditor tours an
entity’s production facility?

A. Insurance coverage on the facility has lapsed.

B. Overhead has been overapplied.
C. Depreciation expense on fully depreciated machinery has been recognized.
D. Necessary facility maintenance has not been performed.

69. Which of the following controls would an entity most likely use in safeguarding against the loss of trading
securities?

A. The independent auditor traces all purchases and sales of trading securities through the subsidiary
ledgers to the general ledger.
B. An independent trust company that has no direct contract with the employees who have record-
keeping responsibilities has possession of the securities.
C. The internal auditor inspects the trading securities in the entity’s safe each year on the balance sheet
date.
D. A designated member of the board of directors controls the securities in a bank safe-deposit box.

70. Which of the following controls would a company most likely use to safeguard marketable securities are not
in the custody of an independent trust agent?

A. The chairman of the board of directors verifies the marketable securities, which are kept in a bank safe-
deposit box, each year on the balance sheet date.
B. The internal auditor and the controller independently trace all purchases and sales of marketable
securities from the subsidiary ledger ledgers to the general ledger.
C. Two company officials have joint control of marketable securities, which are kept in a bank safe-
deposit box.
D. The investment committee of the board of directors periodically reviews the investment decisions
delegated to the treasurer.

71. Which of the following internal control activities would an entity most likely implement to assist in satisfying
the completeness assertion related to noncurrent investments?

A. The internal auditor compares the securities in the bank safe-deposit box with recorded
investments.
B. Senior management verifies that securities in the bank safe-deposit box are registered in the entity’s
name.
C. The controller compares the current market prices of recorded investments with the brokers’ advices on
file.
D. The treasurer vouches the acquisition of securities by comparing brokers’ advices with canceled checks.

72. Which symbol would be used to represent a computer process?

A. #1 C. #4
B. #2 D. #12
73. Which symbol would be used to represent decisions?

A. #9 C. #8
B. #11 D. #5

74. Which symbol would be used to represent an invoice sent to a costumer?

A. #2 C. #1
B. #5 D. #9

75. Which symbol would be used to represent a general ledger?

A. #2 C. #3
B. #1 D. #4

76. Which symbol would be used to represent a manual process?

A. #4 C. #9
B. #5 D. #10

77. Which symbol would be used to represent a connection to another part of the flowchart on a different page?

A. #4 C. #10
B. #9 D. #11

78. Which symbol would be used to represent a connection to another part of the flowchart on a different page?

A. #4 C. #10
B. #9 D. #11

79. Which symbol would be used to represent a file of paper documents?

A. #6 C. #8
B. #7 D. #10

80. Which symbol would be used to represent the display of report on a computer screen?

A. #1 C. #3
B. #2 D. #10

81. Which symbol would be used to represent a beginning, an ending, or a connection to another procedure?

A. #8 C. #11
B. #10 D. #12

82. Duplicate checking of calculations is an example of a corrective control.

Adherence to appropriate procedures to submit rejected transactions is an example of detective control.

A. True; False C. False; True

B. True; True D. False; False

83. General IT controls are policies and procedures that relate to many applications and support the effective
functioning of application controls. General IT controls commonly include controls over the following,
except

A. Data center and network operations

B. Manual follow-up of exception reports
C. Access security
D. Program change

84. Application controls are

A. Manual or automated procedures that typically operate at a business process level and apply to
the processing of transaction by individual applications.
B. Policies and procedures that relate to many applications.
C. Controls that maintain the integrity of information and security of data such as controls over system
software acquisition, change and maintenance.
D. Controls that relate to many applications and support the effective functioning of general controls.
85. Under PSA 315, monitoring of controls is an internal control component that involves a process of assessing
the quality of internal control performance over time. It involves assessing the design and operation of
controls on a timely basis and taking necessary corrective actions. Monitoring of controls is accomplished
through ongoing monitoring activities, separate evaluations, or a combination of the two. An entity’s ongoing
monitoring activities often include

A. Periodic reporting by the entity’s internal auditors about the functioning of internal control.
B. Reviewing the purchasing function.
C. Periodic audits by the audit committee.
D. The audit of the annual financial statements.