Reference no: EM132804302

Problem 1: Which of the following fraudulent entries is most likely to be made to conceal the theft of an asset?

a. Debit expenses, and credit the asset.
b. Debit the asset, and credit another asset account.
c. Debit revenue, and credit the asset.
d. Debit another asset account, and credit the asset.

Problem 2: Which of the following circumstances may lead to the auditor to consider inclusion of Emphasis of Matter paragraph in the auditor's report?

A. Early application (where permitted) of a new accounting standard that has a pervasive effect on the financial statements in advance of its effective date.
B. Outcome of exceptional litigation or regulatory action affecting the entity is certain.
C. A major catastrophe that has had a minimal effect on the entity's financial position.
D. All of the above

Problem 3: In designing and performing tests of controls, the auditor shall perform other audit procedures in combination with inquiry to obtain audit evidence about the operating effectiveness of the controls, including which of the following?

A. By whom or by what means controls were applied
B. The errors encountered during the application of control for the past three years
C. Composition of the company's IT department
D. A and B only