Audit MC Practice - 6.doc

Practice Exam #2 Name: 1. The purpose of the requirement in SAS No. 84 of having communication between the predecessor and successor auditor is to: a. allow the predecessor to disclose information which would otherwise be confidential. b. help the successor auditor to evaluate whether to accept the engagement. c. help the client by facilitating the change of auditors. d. ensure the predecessor collects all unpaid fees prior to a change in auditor. 2. Which of the following is correct with respect to the use of analytical procedures? a. Analytical procedures may be used in evaluating balances in the testing phase as long as the auditor also uses them in assessing the going concern assumption. b. Analytical procedures must be used throughout the audit. c. Analytical procedures used in the testing phase of the audit are primarily used to direct an auditor’s attention so that the auditor’s understanding of the business is improved. d. None of the above is correct. 3. Which of the following is correct with respect to the use of analytical procedures? a. Analytical procedures may be used in evaluating balances in the testing phase as long as the auditor also uses them in assessing the going concern assumption. b. Analytical procedures must be used throughout the audit. c. Analytical procedures used in the testing phase of the audit are primarily used to direct an auditor’s attention so that the auditor’s understanding of the business is improved. d. None of the above is correct. 4. Which of the following would not likely be classified as a related-party transaction? a. An advance of one week’s salary to an employee. b. Sales of merchandise between affiliated companies. c. Loans or credit sales to the principal owner of the client company. d. Exchanges of equipment between two companies owned by the same person. 5. Which of the following would not usually be included in the minutes of the board of directors? a. The duties and p