receivable. b. the allowance for doubtful accounts was understated. c.

unbilled shipments had

occurred during the period. d. disclosure in the statements of pledged receivables was

inadequate. e. the balance of accounts payable was overstated. 83. The Due Care Principle in

the AICPA's Code of Professional Conduct does not require of the auditor: a. freedom from

errors in judgment. b. thoroughness in their work. c. completion of the service promptly. d.

observation of technical and ethical standards. e. continual improvement in competence. 10 --

Page 16 84. The subject of the auditing procedure observing is least likely to be: a. personnel.

b. procedures. c. processes. d. inventory taking. e. physical assets. 85. The quality control

element (s) most directly related to the auditor's assessment of her competence to perform the

audit is (are): a. assigning personnel to the engagement and consultation. b. assigning

personnel to the engagement. c. consultation. d. independence. e. supervision. 86. A tour of

the operating facilities is least likely to provide the auditor familiarity with the: a. location of

computing facilities. b. plant layout. c. potential trouble spots such as obsolete materials. d.

storage facilities. e. manufacturing process. 87. The main purpose of the engagement letter is

to: a. avoid litigation. b. indicate the likely opinion to be issued. c. confirm the terms of the

engagement. d. clearly delineate management's responsibility for the conduct of the audit. e.

clearly delineate the auditor's responsibility for the conduct of the audit. 88. The subject of

the auditing procedure inspecting is least likely to be: a. documents. b. physical assets. c.

accounting records. d. lease agreements. e. personnel. 89. The essence of the due care

standard is that the auditor should not be guilty of: a. bias. b. objectivity. c. errors in

judgment. d. fraud. e. negligence. 11 --Page 17 90. Dual-purpose tests are audit tests designed

to: a. test more than one control with a single procedure. b. test controls that are relevant to

multiple assertions. c. provide evidence for more than a single accounting period. d. test dual

controls with multiple procedures. e. test for monetary errors while testing for compliance

with controls. 91. Which one of the following is not among the conditions that give rise to a
demand by external users for independent audits of financial statements? a. remoteness of

users b. complexity of subject matter c. the securities acts, administered by the SEC d.

potential conflict of interest between users and preparers of the statements e. consequence for

making decisions 92. An audit that involves obtaining and evaluating evidence in order to

determine whether certain financial or operating activities of an entity conform to specified

conditions, rules, or regulations is a(n): a. internal audit. b. external audit. c. operational audit.

d. compliance audit. e. financial statement audit. 93. Which one of the following is among the

three components of audit risk? a. incurrence risk b. occurrence risk c. rejection risk