Auditing practice questions Test 1 (Chapters
1-4) UPDATED ACTUAL Exam Questions
and CORRECT Answers
C) Completeness - CORRECT ANSWER - The audit objective that all transactions and
accounts that should be presented in the financial statements are in fact included is related to
which of the PCAOB assertions?
A) Existence
B) Rights and obligations
C) Completeness
D) Valuation
B) completeness - CORRECT ANSWER - Cutoff tests designed to detect purchases made
before the end of the year that have been recorded in the subsequent year provide assurance
about management's assertion of
A) presentation and disclosure
B) completeness
C) rights and obligations
D) existence
D) presentation and disclosure - CORRECT ANSWER - During an audit of an entity's
stockholders' equity accounts, the auditor determines whether there are restrictions on retained
earnings resulting from loans, agreements or state law. This audit procedure more likely is
intended to verify management's assertion of
A) existence or occurence
B) completeness
C) valuation or allocation
, D) presentation and disclosure
D) Existence - CORRECT ANSWER - The confirmation of an account payable balance
selected from the general ledger provides primary evidence regarding which management
assertion?
A) Completeness
B) Valuation
C) Allocation
D) Existence
B) Evidence obtained from independent sources - CORRECT ANSWER - What type of
evidence would provide the highest level of assurance in an attestation engagement?
A) Evidence secured solely from within the entity
B) Evidence obtained from independent sources
C) Evidence obtained indirectly
D) Evidence obtained from multiple internal inquiries
D) Inventory is complete - CORRECT ANSWER - Which of the following management
assertions is an auditor most likely testing if the audit objective states that all inventory on hand
is reflected in the ending inventory balance?
A) The entity has rights to the inventory
B) Inventory is properly valued
C) Inventory is properly presented in the financial statements
D) Inventory is complete
1-4) UPDATED ACTUAL Exam Questions
and CORRECT Answers
C) Completeness - CORRECT ANSWER - The audit objective that all transactions and
accounts that should be presented in the financial statements are in fact included is related to
which of the PCAOB assertions?
A) Existence
B) Rights and obligations
C) Completeness
D) Valuation
B) completeness - CORRECT ANSWER - Cutoff tests designed to detect purchases made
before the end of the year that have been recorded in the subsequent year provide assurance
about management's assertion of
A) presentation and disclosure
B) completeness
C) rights and obligations
D) existence
D) presentation and disclosure - CORRECT ANSWER - During an audit of an entity's
stockholders' equity accounts, the auditor determines whether there are restrictions on retained
earnings resulting from loans, agreements or state law. This audit procedure more likely is
intended to verify management's assertion of
A) existence or occurence
B) completeness
C) valuation or allocation
, D) presentation and disclosure
D) Existence - CORRECT ANSWER - The confirmation of an account payable balance
selected from the general ledger provides primary evidence regarding which management
assertion?
A) Completeness
B) Valuation
C) Allocation
D) Existence
B) Evidence obtained from independent sources - CORRECT ANSWER - What type of
evidence would provide the highest level of assurance in an attestation engagement?
A) Evidence secured solely from within the entity
B) Evidence obtained from independent sources
C) Evidence obtained indirectly
D) Evidence obtained from multiple internal inquiries
D) Inventory is complete - CORRECT ANSWER - Which of the following management
assertions is an auditor most likely testing if the audit objective states that all inventory on hand
is reflected in the ending inventory balance?
A) The entity has rights to the inventory
B) Inventory is properly valued
C) Inventory is properly presented in the financial statements
D) Inventory is complete
