Test Bank for Auditing & Assurance Services 9th Edition by Timothy
Louwers, Jerry Strawser
Chap 01 9e Answers Included
1) 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
2) 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.
3) 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 most likely is intended to verify management's assertion of
A) existence or occurrence.
B) completeness.
C) valuation or allocation.
D) presentation and disclosure.
4) 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
1
,5) 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.
6) 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.
7) An auditor traces the serial numbers on equipment to a nonissuer's subledger. Which of the
following management assertions is supported by this test?
A) Valuation and allocation
B) Completeness
C) Rights and obligations
D) Presentation and disclosure
8) An auditor has substantial doubt about the entity's ability to continue as a going concern for a
reasonable period of time because of negative cash flows and working capital deficiencies.
Under these circumstances, the auditor would be most concerned about the
A) control environment factors that affect the organizational structure.
B) correlation of detection risk and inherent risk.
C) effectiveness of the entity's internal control activities.
D) possible effects on the entity's financial statements.
9) Which of the following types of audit evidence provides theleast assurance of reliability?
A) Receivable confirmations received from the client's customers.
B) Prenumbered receiving reports completed by the client's employees.
C) Prior months' bank statements obtained from the client.
D) Municipal property tax bills prepared in the client's name.
2
,10) Whichs2ofs2thes2followings2iss2as2managements2assertions2regardings2accounts2balancess2ats2
thes2periods2end?
A) Transactionss2ands2eventss2thats2haves2beens2recordeds2haves2occurreds2ands2perta
ins2tos2thes2entity.
B) Transactionss2ands2eventss2haves2beens2recordeds2ins2thes2propers2accounts.
C) Thes2entitys2holdss2ors2controlss2thes2rightss2tos2assets,s2ands2liabilitiess2ares2obligati
onss2ofs2thes2entity.
D) Amountss2ands2others2datas2relateds2tos2thes2transactionss2ands2eventss2haves2beens
2recordeds2appropriately.
11) As2practitioners2iss2engageds2tos2expresss2ans2opinions2ons2management'ss2assertions2thats2t
hes2squares2footages2ofs2as2warehouses2offereds2fors2sales2iss2150,000s2squares2feet.s2Thes2pr
actitioners2shoulds2refers2tos2whichs2ofs2thes2followings2sourcess2fors2professionals2guidance
?
A) Statements2ofs2Auditings2Standards.
B) Statementss2ons2Standardss2fors2Attestations2Engagements.
C) Statementss2ons2Standardss2fors2Accountings2ands2Reviews2Services.
D) Statementss2ons2Standardss2fors2Consultings2Services.
12) Ins2auditings2thes2long-
terms2debts2account,s2ans2auditor'ss2proceduress2mosts2likelys2woulds2focuss2primarilys2
ons2management'ss2assertions2of
A) existence.
B) completeness.
C) allocation.
D) rightss2ands2obligations.
13) Ans2auditors2selecteds2itemss2fors2tests2countss2froms2thes2client'ss2warehouses2durings2thes2p
hysicals2inventorys2observation.s2Thes2auditors2thens2traceds2theses2tests2countss2intos2thes2de
taileds2inventorys2listings2thats2ultimatelys2agreeds2tos2thes2financials2statements.s2Thiss2proce
dures2mosts2likelys2provideds2evidences2concernings2management'ss2assertions2of
A) completeness.
B) valuation.
C) presentations2ands2disclosure.
D) existence.
E) rightss2ands2obligations.
3
, 14) Ans2auditors2selecteds2itemss2froms2thes2client'ss2detaileds2inventorys2listings2(thats2agreeds2t
os2thes2financials2statements).s2Durings2thes2physicals2inventorys2observation,s2thes2auditors2t
hens2founds2eachs2items2selecteds2ands2counteds2thes2numbers2ofs2unitss2ons2hand.s2Assumin
gs2thats2thes2amounts2ons2hands2wass2thes2sames2ass2thes2amounts2ins2thes2client'ss2detaileds2i
nventorys2listing,s2thiss2procedures2mosts2likelys2woulds2provides2evidences2concernings2ma
nagement'ss2assertions2of
A) completeness.
B) valuation.
C) presentations2ands2disclosure.
D) existence.
E) rightss2ands2obligations.
15) Accordings2tos2PCAOBs2Auditings2Standards2No.s22201s2(s2ASs22201),s2thes2auditors2shoul
ds2identifys2significants2accountss2ands2disclosuress2ands2theirs2relevants2assertions.s2Whic
hs2ofs2thes2followings2financials2statements2assertionss2iss2nots2explicitlys2identifieds2ins2A
Ss22201?
A) Completeness
B) Valuations2ors2allocation
C) Accuracy
D) Existences2ors2occurrence
E) Alls2ofs2theses2ares2assertionss2identifieds2ins2ASs22201.
16) Whens2testings2thes2completenesss2assertions2fors2as2liabilitys2account,s2ans2auditors2ordinari
lys2workss2froms2the
A) financials2statementss2tos2thes2potentiallys2unrecordeds2items.
B) potentiallys2unrecordeds2itemss2tos2thes2financials2statements.
C) accountings2recordss2tos2thes2supportings2evidence.
D) trials2balances2tos2thes2subsidiarys2ledger.
17) Ifs2ans2auditors2iss2performings2proceduress2relateds2tos2thes2informations2thats2iss2contained
s2ins2thes2client'ss2pensions2footnote,s2he/shes2iss2mosts2likelys2tos2obtains2evidences2concerni
ngs2management'ss2assertions2about
A) rightss2ands2obligations.
B) existence.
C) valuation.
D) presentations2ands2disclosure.
4
Louwers, Jerry Strawser
Chap 01 9e Answers Included
1) 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
2) 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.
3) 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 most likely is intended to verify management's assertion of
A) existence or occurrence.
B) completeness.
C) valuation or allocation.
D) presentation and disclosure.
4) 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
1
,5) 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.
6) 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.
7) An auditor traces the serial numbers on equipment to a nonissuer's subledger. Which of the
following management assertions is supported by this test?
A) Valuation and allocation
B) Completeness
C) Rights and obligations
D) Presentation and disclosure
8) An auditor has substantial doubt about the entity's ability to continue as a going concern for a
reasonable period of time because of negative cash flows and working capital deficiencies.
Under these circumstances, the auditor would be most concerned about the
A) control environment factors that affect the organizational structure.
B) correlation of detection risk and inherent risk.
C) effectiveness of the entity's internal control activities.
D) possible effects on the entity's financial statements.
9) Which of the following types of audit evidence provides theleast assurance of reliability?
A) Receivable confirmations received from the client's customers.
B) Prenumbered receiving reports completed by the client's employees.
C) Prior months' bank statements obtained from the client.
D) Municipal property tax bills prepared in the client's name.
2
,10) Whichs2ofs2thes2followings2iss2as2managements2assertions2regardings2accounts2balancess2ats2
thes2periods2end?
A) Transactionss2ands2eventss2thats2haves2beens2recordeds2haves2occurreds2ands2perta
ins2tos2thes2entity.
B) Transactionss2ands2eventss2haves2beens2recordeds2ins2thes2propers2accounts.
C) Thes2entitys2holdss2ors2controlss2thes2rightss2tos2assets,s2ands2liabilitiess2ares2obligati
onss2ofs2thes2entity.
D) Amountss2ands2others2datas2relateds2tos2thes2transactionss2ands2eventss2haves2beens
2recordeds2appropriately.
11) As2practitioners2iss2engageds2tos2expresss2ans2opinions2ons2management'ss2assertions2thats2t
hes2squares2footages2ofs2as2warehouses2offereds2fors2sales2iss2150,000s2squares2feet.s2Thes2pr
actitioners2shoulds2refers2tos2whichs2ofs2thes2followings2sourcess2fors2professionals2guidance
?
A) Statements2ofs2Auditings2Standards.
B) Statementss2ons2Standardss2fors2Attestations2Engagements.
C) Statementss2ons2Standardss2fors2Accountings2ands2Reviews2Services.
D) Statementss2ons2Standardss2fors2Consultings2Services.
12) Ins2auditings2thes2long-
terms2debts2account,s2ans2auditor'ss2proceduress2mosts2likelys2woulds2focuss2primarilys2
ons2management'ss2assertions2of
A) existence.
B) completeness.
C) allocation.
D) rightss2ands2obligations.
13) Ans2auditors2selecteds2itemss2fors2tests2countss2froms2thes2client'ss2warehouses2durings2thes2p
hysicals2inventorys2observation.s2Thes2auditors2thens2traceds2theses2tests2countss2intos2thes2de
taileds2inventorys2listings2thats2ultimatelys2agreeds2tos2thes2financials2statements.s2Thiss2proce
dures2mosts2likelys2provideds2evidences2concernings2management'ss2assertions2of
A) completeness.
B) valuation.
C) presentations2ands2disclosure.
D) existence.
E) rightss2ands2obligations.
3
, 14) Ans2auditors2selecteds2itemss2froms2thes2client'ss2detaileds2inventorys2listings2(thats2agreeds2t
os2thes2financials2statements).s2Durings2thes2physicals2inventorys2observation,s2thes2auditors2t
hens2founds2eachs2items2selecteds2ands2counteds2thes2numbers2ofs2unitss2ons2hand.s2Assumin
gs2thats2thes2amounts2ons2hands2wass2thes2sames2ass2thes2amounts2ins2thes2client'ss2detaileds2i
nventorys2listing,s2thiss2procedures2mosts2likelys2woulds2provides2evidences2concernings2ma
nagement'ss2assertions2of
A) completeness.
B) valuation.
C) presentations2ands2disclosure.
D) existence.
E) rightss2ands2obligations.
15) Accordings2tos2PCAOBs2Auditings2Standards2No.s22201s2(s2ASs22201),s2thes2auditors2shoul
ds2identifys2significants2accountss2ands2disclosuress2ands2theirs2relevants2assertions.s2Whic
hs2ofs2thes2followings2financials2statements2assertionss2iss2nots2explicitlys2identifieds2ins2A
Ss22201?
A) Completeness
B) Valuations2ors2allocation
C) Accuracy
D) Existences2ors2occurrence
E) Alls2ofs2theses2ares2assertionss2identifieds2ins2ASs22201.
16) Whens2testings2thes2completenesss2assertions2fors2as2liabilitys2account,s2ans2auditors2ordinari
lys2workss2froms2the
A) financials2statementss2tos2thes2potentiallys2unrecordeds2items.
B) potentiallys2unrecordeds2itemss2tos2thes2financials2statements.
C) accountings2recordss2tos2thes2supportings2evidence.
D) trials2balances2tos2thes2subsidiarys2ledger.
17) Ifs2ans2auditors2iss2performings2proceduress2relateds2tos2thes2informations2thats2iss2contained
s2ins2thes2client'ss2pensions2footnote,s2he/shes2iss2mosts2likelys2tos2obtains2evidences2concerni
ngs2management'ss2assertions2about
A) rightss2ands2obligations.
B) existence.
C) valuation.
D) presentations2ands2disclosure.
4
