1
,Chap 01 9e
d d
Answers Included d
1) The audit objective that all transactions and accounts that should be presented in the financial
d d d d d d d d d d d d d d
d statements are in fact included is related to which of the PCAOB assertions?
d d d d d d d d d d d d
A) Existence
B) Rights and obligations d d
C) Completeness
D) Valuation
2) Cutoff tests designed to detect purchases made before the end of the year that have been
d d d d d d d d d d d d d d d
d recorded in the subsequent year provide assurance about management's assertion of
d d d d d d d d d d
A) presentation and disclosure. d d
B) completeness.
C) rights and obligations. d d
D) existence.
3) During an audit of an entity's stockholders' equity accounts, the auditor determines whether
d d d d d d d d d d d d
d there are restrictions on retained earnings resulting from loans, agreements, or state law. This
d d d d d d d d d d d d d
d audit procedure most likely is intended to verify management's assertion of
d d d d d d d d d d
A) existence or occurrence. d d
B) completeness.
C) valuation or allocation. d d
D) presentation and disclosure. d d
4) The confirmation of an account payable balance selected from the general ledger provides
d d d d d d d d d d d d
d primary evidence regarding which management assertion?
d d d d d
A) Completeness
B) Valuation
C) Allocation
D) Existence
2
,5) What type of evidence would provide the highest level of assurance in an attestation
d d d d d d d d d d d d d
d engagement?
A) Evidence secured solely from within the entity.
d d d d d d
B) Evidence obtained from independent sources. d d d d
C) Evidence obtained indirectly. d d
D) Evidence obtained from multiple internal inquiries.
d d d d d
6) Which of the following management assertions is an auditor most likely testing if the audit
d d d d d d d d d d d d d d
d objective states that all inventory on hand is reflected in the ending inventory balance?
d d d d d d d d d d d d d
A) The entity has rights to the inventory.
d d d d d d
B) Inventory is properly valued. d d d
C) Inventory is properly presented in the financial statements.
d d d d d d d
D) Inventory is complete. d d
7) An auditor traces the serial numbers on equipment to a nonissuer's subledger. Which of the
d d d d d d d d d d d d d d
d following management assertions is supported by this test?
d d d d d d d
A) Valuation and allocation d d
B) Completeness
C) Rights and obligations d d
D) Presentation and disclosure d d
8) An auditor has substantial doubt about the entity's ability to continue as a going concern for a
d d d d d d d d d d d d d d d d
d reasonable period of time because of negative cash flows and working capital deficiencies.
d d d d d d d d d d d d
d Under these circumstances, the auditor would be most concerned about the
d d d d d d d d d d
A) control environment factors that affect the organizational structure.
d d d d d d d
B) correlation of detection risk and inherent risk. d d d d d d
C) effectiveness of the entity's internal control activities. d d d d d d
D) possible effects on the entity's financial statements.
d d d d d d
9) Which of the following types of audit evidence provides theleast assurance of reliability?
d d d d d d d d d d d d
A) Receivable confirmations received from the client's customers. d d d d d d
B) Prenumbered receiving reports completed by the client's employees. d d d d d d d
C) Prior months' bank statements obtained from the client.
d d d d d d d
D) Municipal property tax bills prepared in the client's name.
d d d d d d d d
3
, 10) Which of the following is a management assertion regarding account balances at the period
d d d d d d d d d d d d d
d end?
A) Transactions and events that have been recorded have occurred and pertain to the
d d d d d d d d d d d d
entity.
d
B) Transactions and events have been recorded in the proper accounts. d d d d d d d d d
C) The entity holds or controls the rights to assets, and liabilities are obligations of the
d d d d d d d d d d d d d d
entity.
d
D) Amounts and other data related to the transactions and events have been recorded
d d d d d d d d d d d d
appropriately.
d
11) A practitioner is engaged to express an opinion on management's assertion that the square
d d d d d d d d d d d d d
d footage of a warehouse offered for sale is 150,000 square feet. The practitioner should refer
d d d d d d d d d d d d d d
d to which of the following sources for professional guidance?
d d d d d d d d
A) Statement of Auditing Standards. d d d
B) Statements on Standards for Attestation Engagements. d d d d d
C) Statements on Standards for Accounting and Review Services. d d d d d d d
D) Statements on Standards for Consulting Services. d d d d d
12) In auditing the long-term debt account, an auditor's procedures most likely would focus
d d d d d d d d d d d d
d primarily on management's assertion of
d d d d
A) existence.
B) completeness.
C) allocation.
D) rights and obligations. d d
13) An auditor selected items for test counts from the client's warehouse during the physical
d d d d d d d d d d d d d
d inventory observation. The auditor then traced these test counts into the detailed inventory
d d d d d d d d d d d d
d listing that ultimately agreed to the financial statements. This procedure most likely provided
d d d d d d d d d d d d
d evidence concerning management's assertion of
d d d d
A) completeness.
B) valuation.
C) presentation and disclosure. d d
D) existence.
E) rights and obligations. d d
4
,Chap 01 9e
d d
Answers Included d
1) The audit objective that all transactions and accounts that should be presented in the financial
d d d d d d d d d d d d d d
d statements are in fact included is related to which of the PCAOB assertions?
d d d d d d d d d d d d
A) Existence
B) Rights and obligations d d
C) Completeness
D) Valuation
2) Cutoff tests designed to detect purchases made before the end of the year that have been
d d d d d d d d d d d d d d d
d recorded in the subsequent year provide assurance about management's assertion of
d d d d d d d d d d
A) presentation and disclosure. d d
B) completeness.
C) rights and obligations. d d
D) existence.
3) During an audit of an entity's stockholders' equity accounts, the auditor determines whether
d d d d d d d d d d d d
d there are restrictions on retained earnings resulting from loans, agreements, or state law. This
d d d d d d d d d d d d d
d audit procedure most likely is intended to verify management's assertion of
d d d d d d d d d d
A) existence or occurrence. d d
B) completeness.
C) valuation or allocation. d d
D) presentation and disclosure. d d
4) The confirmation of an account payable balance selected from the general ledger provides
d d d d d d d d d d d d
d primary evidence regarding which management assertion?
d d d d d
A) Completeness
B) Valuation
C) Allocation
D) Existence
2
,5) What type of evidence would provide the highest level of assurance in an attestation
d d d d d d d d d d d d d
d engagement?
A) Evidence secured solely from within the entity.
d d d d d d
B) Evidence obtained from independent sources. d d d d
C) Evidence obtained indirectly. d d
D) Evidence obtained from multiple internal inquiries.
d d d d d
6) Which of the following management assertions is an auditor most likely testing if the audit
d d d d d d d d d d d d d d
d objective states that all inventory on hand is reflected in the ending inventory balance?
d d d d d d d d d d d d d
A) The entity has rights to the inventory.
d d d d d d
B) Inventory is properly valued. d d d
C) Inventory is properly presented in the financial statements.
d d d d d d d
D) Inventory is complete. d d
7) An auditor traces the serial numbers on equipment to a nonissuer's subledger. Which of the
d d d d d d d d d d d d d d
d following management assertions is supported by this test?
d d d d d d d
A) Valuation and allocation d d
B) Completeness
C) Rights and obligations d d
D) Presentation and disclosure d d
8) An auditor has substantial doubt about the entity's ability to continue as a going concern for a
d d d d d d d d d d d d d d d d
d reasonable period of time because of negative cash flows and working capital deficiencies.
d d d d d d d d d d d d
d Under these circumstances, the auditor would be most concerned about the
d d d d d d d d d d
A) control environment factors that affect the organizational structure.
d d d d d d d
B) correlation of detection risk and inherent risk. d d d d d d
C) effectiveness of the entity's internal control activities. d d d d d d
D) possible effects on the entity's financial statements.
d d d d d d
9) Which of the following types of audit evidence provides theleast assurance of reliability?
d d d d d d d d d d d d
A) Receivable confirmations received from the client's customers. d d d d d d
B) Prenumbered receiving reports completed by the client's employees. d d d d d d d
C) Prior months' bank statements obtained from the client.
d d d d d d d
D) Municipal property tax bills prepared in the client's name.
d d d d d d d d
3
, 10) Which of the following is a management assertion regarding account balances at the period
d d d d d d d d d d d d d
d end?
A) Transactions and events that have been recorded have occurred and pertain to the
d d d d d d d d d d d d
entity.
d
B) Transactions and events have been recorded in the proper accounts. d d d d d d d d d
C) The entity holds or controls the rights to assets, and liabilities are obligations of the
d d d d d d d d d d d d d d
entity.
d
D) Amounts and other data related to the transactions and events have been recorded
d d d d d d d d d d d d
appropriately.
d
11) A practitioner is engaged to express an opinion on management's assertion that the square
d d d d d d d d d d d d d
d footage of a warehouse offered for sale is 150,000 square feet. The practitioner should refer
d d d d d d d d d d d d d d
d to which of the following sources for professional guidance?
d d d d d d d d
A) Statement of Auditing Standards. d d d
B) Statements on Standards for Attestation Engagements. d d d d d
C) Statements on Standards for Accounting and Review Services. d d d d d d d
D) Statements on Standards for Consulting Services. d d d d d
12) In auditing the long-term debt account, an auditor's procedures most likely would focus
d d d d d d d d d d d d
d primarily on management's assertion of
d d d d
A) existence.
B) completeness.
C) allocation.
D) rights and obligations. d d
13) An auditor selected items for test counts from the client's warehouse during the physical
d d d d d d d d d d d d d
d inventory observation. The auditor then traced these test counts into the detailed inventory
d d d d d d d d d d d d
d listing that ultimately agreed to the financial statements. This procedure most likely provided
d d d d d d d d d d d d
d evidence concerning management's assertion of
d d d d
A) completeness.
B) valuation.
C) presentation and disclosure. d d
D) existence.
E) rights and obligations. d d
4
