Audit of Specific Items Quiz

Auditing · Topic 9

Work through 25 multiple-choice questions, one at a time. Submit each answer for feedback. At the end, review your score and see which concepts to revisit.

Review the Q&A Auditing quiz learning path

1. A warehouse count contains missing and damaged stock. Which auditing concept best fits this case?Inventory existence and conditionPayables cut-off and completenessLitigation and claimsGoing concern

2. An overdue customer has disputed the amount owed and stopped making payments. Which auditing concept best fits this case?Inventory existence and conditionLitigation and claimsGoing concernReceivables valuation

3. An invoice arrives in January for goods received before year-end. Which auditing concept best fits this case?Inventory existence and conditionReceivables valuationPayables cut-off and completenessGoing concern

4. The company is being sued and management’s estimate conflicts with its lawyer’s assessment. Which auditing concept best fits this case?Inventory existence and conditionLitigation and claimsReceivables valuationPayables cut-off and completeness

5. A company is struggling to refinance short-term debt that matures soon after year-end. Which auditing concept best fits this case?Going concernReceivables valuationPayables cut-off and completenessLitigation and claims

6. A warehouse count contains missing and damaged stock. What is the most appropriate response?Assess recoverability using disputes, later receipts and impairment assumptionsEvaluate the applicable recognition and disclosure criteria with relevant evidenceObserve count procedures, perform test counts, and inspect damaged itemsEvaluate management’s assessment, forecasts and support for refinancing assumptions

7. An overdue customer has disputed the amount owed and stopped making payments. What is the most appropriate response?Observe count procedures, perform test counts, and inspect damaged itemsAssess recoverability using disputes, later receipts and impairment assumptionsDetermine whether the liability should be recognized before year-endEvaluate management’s assessment, forecasts and support for refinancing assumptions

8. An invoice arrives in January for goods received before year-end. What is the most appropriate response?Determine whether the liability should be recognized before year-endObserve count procedures, perform test counts, and inspect damaged itemsAssess recoverability using disputes, later receipts and impairment assumptionsEvaluate the applicable recognition and disclosure criteria with relevant evidence

9. The company is being sued and management’s estimate conflicts with its lawyer’s assessment. What is the most appropriate response?Assess recoverability using disputes, later receipts and impairment assumptionsDetermine whether the liability should be recognized before year-endEvaluate management’s assessment, forecasts and support for refinancing assumptionsEvaluate the applicable recognition and disclosure criteria with relevant evidence

10. A company is struggling to refinance short-term debt that matures soon after year-end. What is the most appropriate response?Observe count procedures, perform test counts, and inspect damaged itemsDetermine whether the liability should be recognized before year-endEvaluate management’s assessment, forecasts and support for refinancing assumptionsEvaluate the applicable recognition and disclosure criteria with relevant evidence

11. A warehouse count contains missing and damaged stock. Which evidence would be most directly useful?Count sheets, inspection notes, and reconciliation to final recordsAged balance, correspondence, and subsequent collectionsGoods received note and invoice tied to the reporting dateCash flow forecasts, facility terms and lender correspondence

12. An overdue customer has disputed the amount owed and stopped making payments. Which evidence would be most directly useful?Count sheets, inspection notes, and reconciliation to final recordsGoods received note and invoice tied to the reporting dateCounsel correspondence and management’s rationale for its estimateAged balance, correspondence, and subsequent collections

13. An invoice arrives in January for goods received before year-end. Which evidence would be most directly useful?Aged balance, correspondence, and subsequent collectionsCounsel correspondence and management’s rationale for its estimateGoods received note and invoice tied to the reporting dateCash flow forecasts, facility terms and lender correspondence

14. The company is being sued and management’s estimate conflicts with its lawyer’s assessment. Which evidence would be most directly useful?Count sheets, inspection notes, and reconciliation to final recordsCounsel correspondence and management’s rationale for its estimateGoods received note and invoice tied to the reporting dateCash flow forecasts, facility terms and lender correspondence

15. A company is struggling to refinance short-term debt that matures soon after year-end. Which evidence would be most directly useful?Cash flow forecasts, facility terms and lender correspondenceCount sheets, inspection notes, and reconciliation to final recordsAged balance, correspondence, and subsequent collectionsCounsel correspondence and management’s rationale for its estimate

16. A warehouse count contains missing and damaged stock. Which conclusion is best supported by the case?A legally outstanding amount may still be impairedA later invoice can relate to an earlier obligationDamaged goods may need separate valuation workRecognition or disclosure depends on the facts and the reporting framework

17. An overdue customer has disputed the amount owed and stopped making payments. Which conclusion is best supported by the case?A later invoice can relate to an earlier obligationA legally outstanding amount may still be impairedRecognition or disclosure depends on the facts and the reporting frameworkViability analysis depends on supported financing assumptions

18. An invoice arrives in January for goods received before year-end. Which conclusion is best supported by the case?A later invoice can relate to an earlier obligationDamaged goods may need separate valuation workRecognition or disclosure depends on the facts and the reporting frameworkViability analysis depends on supported financing assumptions

19. The company is being sued and management’s estimate conflicts with its lawyer’s assessment. Which conclusion is best supported by the case?Damaged goods may need separate valuation workA legally outstanding amount may still be impairedViability analysis depends on supported financing assumptionsRecognition or disclosure depends on the facts and the reporting framework

20. A company is struggling to refinance short-term debt that matures soon after year-end. Which conclusion is best supported by the case?Damaged goods may need separate valuation workA legally outstanding amount may still be impairedViability analysis depends on supported financing assumptionsA later invoice can relate to an earlier obligation

21. A warehouse count contains missing and damaged stock. Which shortcut would most directly undermine the work in this case?Signing off quantities solely from management’s final count summaryDating every expense and liability by invoice receipt aloneIgnoring legal evidence because management already chose a figureTreating an unsigned refinancing proposal as committed funding

22. An overdue customer has disputed the amount owed and stopped making payments. Which shortcut would most directly undermine the work in this case?Signing off quantities solely from management’s final count summaryIgnoring legal evidence because management already chose a figureTreating an unsigned refinancing proposal as committed fundingAssuming a positive balance confirms full collectability

23. An invoice arrives in January for goods received before year-end. Which shortcut would most directly undermine the work in this case?Signing off quantities solely from management’s final count summaryAssuming a positive balance confirms full collectabilityDating every expense and liability by invoice receipt aloneTreating an unsigned refinancing proposal as committed funding

24. The company is being sued and management’s estimate conflicts with its lawyer’s assessment. Which shortcut would most directly undermine the work in this case?Signing off quantities solely from management’s final count summaryIgnoring legal evidence because management already chose a figureAssuming a positive balance confirms full collectabilityDating every expense and liability by invoice receipt alone

25. A company is struggling to refinance short-term debt that matures soon after year-end. Which shortcut would most directly undermine the work in this case?Treating an unsigned refinancing proposal as committed fundingAssuming a positive balance confirms full collectabilityDating every expense and liability by invoice receipt aloneIgnoring legal evidence because management already chose a figure

Show the answer key

Inventory existence and condition Damaged goods may need separate valuation work.
Receivables valuation A legally outstanding amount may still be impaired.
Payables cut-off and completeness A later invoice can relate to an earlier obligation.
Litigation and claims Recognition or disclosure depends on the facts and the reporting framework.
Going concern Viability analysis depends on supported financing assumptions.
Observe count procedures, perform test counts, and inspect damaged items Damaged goods may need separate valuation work.
Assess recoverability using disputes, later receipts and impairment assumptions A legally outstanding amount may still be impaired.
Determine whether the liability should be recognized before year-end A later invoice can relate to an earlier obligation.
Evaluate the applicable recognition and disclosure criteria with relevant evidence Recognition or disclosure depends on the facts and the reporting framework.
Evaluate management’s assessment, forecasts and support for refinancing assumptions Viability analysis depends on supported financing assumptions.
Count sheets, inspection notes, and reconciliation to final records Observe count procedures, perform test counts, and inspect damaged items.
Aged balance, correspondence, and subsequent collections Assess recoverability using disputes, later receipts and impairment assumptions.
Goods received note and invoice tied to the reporting date Determine whether the liability should be recognized before year-end.
Counsel correspondence and management’s rationale for its estimate Evaluate the applicable recognition and disclosure criteria with relevant evidence.
Cash flow forecasts, facility terms and lender correspondence Evaluate management’s assessment, forecasts and support for refinancing assumptions.
Damaged goods may need separate valuation work Count sheets, inspection notes, and reconciliation to final records would support this assessment.
A legally outstanding amount may still be impaired Aged balance, correspondence, and subsequent collections would support this assessment.
A later invoice can relate to an earlier obligation Goods received note and invoice tied to the reporting date would support this assessment.
Recognition or disclosure depends on the facts and the reporting framework Counsel correspondence and management’s rationale for its estimate would support this assessment.
Viability analysis depends on supported financing assumptions Cash flow forecasts, facility terms and lender correspondence would support this assessment.
Signing off quantities solely from management’s final count summary Damaged goods may need separate valuation work.
Assuming a positive balance confirms full collectability A legally outstanding amount may still be impaired.
Dating every expense and liability by invoice receipt alone A later invoice can relate to an earlier obligation.
Ignoring legal evidence because management already chose a figure Recognition or disclosure depends on the facts and the reporting framework.
Treating an unsigned refinancing proposal as committed funding Viability analysis depends on supported financing assumptions.

These cases use general auditing principles. Apply the relevant local law and professional standards when evaluating a real engagement. Reference: IAASB standards and pronouncements.

Audit of Specific Items Quiz

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