US COLLEGE

COLLEGE OF BUSINESS AND ECONOMICS

DEPARTMENT OF ACCOUNTING AND FINANCE

Course Name: Auditing Principles and Practices II Name _______________________

Course Number: AcFn 3162 ID No: _______________
Assessment Type: Final Exam Section: _______
Program: Degree (Regular) Total Mark Allotted: 60%
Excelled by: Mulatu Amare Time allowed: 1:45hrs

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I. Write TRUE if the statement is correct and FALSE if the statement is incorrect on
the answer sheet provided for the following questions (3 pts each).

1. Independence in appearance refers to the auditor’s freedom from conflict of interest .

2. Investment interest in audit client either direct or indirect may impair independence.
3. A management will be liable for any fraudulent scheme it does not detect.
4. Constructive fraud involves a misrepresentation with the intent to deceive.
5. The detection and prevention of error and fraud is the management’s responsibility.

II. Choose the correct answer from the given alternatives and write the letter of your
choice on the answer sheet provided (3 pts each).

6. An overview of the engagement, outlining the nature and characteristics of the client’s business
operations and the overall audit strategy.
A. Audit program B. Audit plan C. Audit standard D. Audit objective
7. A professional accountant should perform professional services with all of the followings except
A. Due care B. competence C. Diligence D. Inconsistent duty
8. The audit standard that implies sufficient and competent evidential matter is to be obtained through
inspection, observation, inquiries, and confirmation
A. General standard C. Standard of reporting
B. Standard of fieldwork D. Standard of opinion
9. Cash and bank balances are liquid assets that include:
A. Notes and units B. Bank current accounts C. Bank deposit accounts D. All
10. The possibility that the auditors may unknowingly fail to appropriately modify their opinion on
financial statements that are materially misstated.
A. Audit procedure B. Materiality C. Audit risk D. Audit assurance

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11. The processing of receipts from cash and credit sales involves the following cash receipts functions:
A. Paying liabilities C. Depositing cash in ban
B. Receiving cash receipts D. Recording receipts
12. The audit should be performed and the reports prepared with due professional care by persons who
have adequate training and experience states the audit principles of
A. Integrity B. objectivity C. Independence D. Skills and competence
13. Explicit or implicit representations by management that are embodied in the financial statements.
A. Working paper B. Audit sampling C. Client assertions D. Audit evidence
14. Which one of the followings is not an element of audit report?
A. Title B. Address C. Opinion paragraph D. None
15. Violation of legal duty to exercise a degree of care that an ordinary prudent person would exercise
under similar circumstances with resultant damages to another party.
A. Negligence B. Fraud C. Proximate cause D. Breach of contact
III. Match items in the box below with their correct definitions in questions 15-20 (3 pts each).

A. Measurement B. Completeness C. Presentation and disclosure

D. Occurrence E. Existence F. Ownership

16. Must be in accordance with the relevant legislation and accounting standards .
17. A transaction or event is recorded at the proper amount and in the correct period.
18. There are no unrecorded assets or liabilities, transaction or events.
19. A transaction or event happened during the relevant accounting period.
20. An asset or liability exists at a given date.

Answer Sheet

Name ________________________________IDNO_____________Signature-____________

True/False Multiple Choice Matching

1. 6. 11. 16.
2. 7. 12. 17.
3. 8. 13. 18.
4. 9. 14. 19
5. 10. 15. 20.