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) Whichs3ofs3thes3followings3iss3as3managements3assertions3regardings3accounts3balancess3ats3
thes3periods3end?
A) Transactionss3ands3eventss3thats3haves3beens3recordeds3haves3occurreds3ands3perta
ins3tos3thes3entity.
B) Transactionss3ands3eventss3haves3beens3recordeds3ins3thes3propers3accounts.
C) Thes3entitys3holdss3ors3controlss3thes3rightss3tos3assets,s3ands3liabilitiess3ares3obligati
onss3ofs3thes3entity.
D) Amountss3ands3others3datas3relateds3tos3thes3transactionss3ands3eventss3haves3beens
3recordeds3appropriately.
11) As3practitioners3iss3engageds3tos3expresss3ans3opinions3ons3management'ss3assertions3thats3t
hes3squares3footages3ofs3as3warehouses3offereds3fors3sales3iss3150,000s3squares3feet.s3Thes3pr
actitioners3shoulds3refers3tos3whichs3ofs3thes3followings3sourcess3fors3professionals3guidance
?
A) Statements3ofs3Auditings3Standards.
B) Statementss3ons3Standardss3fors3Attestations3Engagements.
C) Statementss3ons3Standardss3fors3Accountings3ands3Reviews3Services.
D) Statementss3ons3Standardss3fors3Consultings3Services.
12) Ins3auditings3thes3long-
terms3debts3account,s3ans3auditor'ss3proceduress3mosts3likelys3woulds3focuss3primarilys3
ons3management'ss3assertions3of
A) existence.
B) completeness.
C) allocation.
D) rightss3ands3obligations.
13) Ans3auditors3selecteds3itemss3fors3tests3countss3froms3thes3client'ss3warehouses3durings3thes3p
hysicals3inventorys3observation.s3Thes3auditors3thens3traceds3theses3tests3countss3intos3thes3de
taileds3inventorys3listings3thats3ultimatelys3agreeds3tos3thes3financials3statements.s3Thiss3proce
dures3mosts3likelys3provideds3evidences3concernings3management'ss3assertions3of
A) completeness.
B) valuation.
C) presentations3ands3disclosure.
D) existence.
E) rightss3ands3obligations.
3
, 14) Ans3auditors3selecteds3itemss3froms3thes3client'ss3detaileds3inventorys3listings3(thats3agreeds3t
os3thes3financials3statements).s3Durings3thes3physicals3inventorys3observation,s3thes3auditors3t
hens3founds3eachs3items3selecteds3ands3counteds3thes3numbers3ofs3unitss3ons3hand.s3Assumin
gs3thats3thes3amounts3ons3hands3wass3thes3sames3ass3thes3amounts3ins3thes3client'ss3detaileds3i
nventorys3listing,s3thiss3procedures3mosts3likelys3woulds3provides3evidences3concernings3ma
nagement'ss3assertions3of
A) completeness.
B) valuation.
C) presentations3ands3disclosure.
D) existence.
E) rightss3ands3obligations.
15) Accordings3tos3PCAOBs3Auditings3Standards3No.s32201s3(s3ASs32201),s3thes3auditors3shoul
ds3identifys3significants3accountss3ands3disclosuress3ands3theirs3relevants3assertions.s3Whic
hs3ofs3thes3followings3financials3statements3assertionss3iss3nots3explicitlys3identifieds3ins3A
Ss32201?
A) Completeness
B) Valuations3ors3allocation
C) Accuracy
D) Existences3ors3occurrence
E) Alls3ofs3theses3ares3assertionss3identifieds3ins3ASs32201.
16) Whens3testings3thes3completenesss3assertions3fors3as3liabilitys3account,s3ans3auditors3ordinari
lys3workss3froms3the
A) financials3statementss3tos3thes3potentiallys3unrecordeds3items.
B) potentiallys3unrecordeds3itemss3tos3thes3financials3statements.
C) accountings3recordss3tos3thes3supportings3evidence.
D) trials3balances3tos3thes3subsidiarys3ledger.
17) Ifs3ans3auditors3iss3performings3proceduress3relateds3tos3thes3informations3thats3iss3contained
s3ins3thes3client'ss3pensions3footnote,s3he/shes3iss3mosts3likelys3tos3obtains3evidences3concerni
ngs3management'ss3assertions3about
A) rightss3ands3obligations.
B) existence.
C) valuation.
D) presentations3ands3disclosure.
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) Whichs3ofs3thes3followings3iss3as3managements3assertions3regardings3accounts3balancess3ats3
thes3periods3end?
A) Transactionss3ands3eventss3thats3haves3beens3recordeds3haves3occurreds3ands3perta
ins3tos3thes3entity.
B) Transactionss3ands3eventss3haves3beens3recordeds3ins3thes3propers3accounts.
C) Thes3entitys3holdss3ors3controlss3thes3rightss3tos3assets,s3ands3liabilitiess3ares3obligati
onss3ofs3thes3entity.
D) Amountss3ands3others3datas3relateds3tos3thes3transactionss3ands3eventss3haves3beens
3recordeds3appropriately.
11) As3practitioners3iss3engageds3tos3expresss3ans3opinions3ons3management'ss3assertions3thats3t
hes3squares3footages3ofs3as3warehouses3offereds3fors3sales3iss3150,000s3squares3feet.s3Thes3pr
actitioners3shoulds3refers3tos3whichs3ofs3thes3followings3sourcess3fors3professionals3guidance
?
A) Statements3ofs3Auditings3Standards.
B) Statementss3ons3Standardss3fors3Attestations3Engagements.
C) Statementss3ons3Standardss3fors3Accountings3ands3Reviews3Services.
D) Statementss3ons3Standardss3fors3Consultings3Services.
12) Ins3auditings3thes3long-
terms3debts3account,s3ans3auditor'ss3proceduress3mosts3likelys3woulds3focuss3primarilys3
ons3management'ss3assertions3of
A) existence.
B) completeness.
C) allocation.
D) rightss3ands3obligations.
13) Ans3auditors3selecteds3itemss3fors3tests3countss3froms3thes3client'ss3warehouses3durings3thes3p
hysicals3inventorys3observation.s3Thes3auditors3thens3traceds3theses3tests3countss3intos3thes3de
taileds3inventorys3listings3thats3ultimatelys3agreeds3tos3thes3financials3statements.s3Thiss3proce
dures3mosts3likelys3provideds3evidences3concernings3management'ss3assertions3of
A) completeness.
B) valuation.
C) presentations3ands3disclosure.
D) existence.
E) rightss3ands3obligations.
3
, 14) Ans3auditors3selecteds3itemss3froms3thes3client'ss3detaileds3inventorys3listings3(thats3agreeds3t
os3thes3financials3statements).s3Durings3thes3physicals3inventorys3observation,s3thes3auditors3t
hens3founds3eachs3items3selecteds3ands3counteds3thes3numbers3ofs3unitss3ons3hand.s3Assumin
gs3thats3thes3amounts3ons3hands3wass3thes3sames3ass3thes3amounts3ins3thes3client'ss3detaileds3i
nventorys3listing,s3thiss3procedures3mosts3likelys3woulds3provides3evidences3concernings3ma
nagement'ss3assertions3of
A) completeness.
B) valuation.
C) presentations3ands3disclosure.
D) existence.
E) rightss3ands3obligations.
15) Accordings3tos3PCAOBs3Auditings3Standards3No.s32201s3(s3ASs32201),s3thes3auditors3shoul
ds3identifys3significants3accountss3ands3disclosuress3ands3theirs3relevants3assertions.s3Whic
hs3ofs3thes3followings3financials3statements3assertionss3iss3nots3explicitlys3identifieds3ins3A
Ss32201?
A) Completeness
B) Valuations3ors3allocation
C) Accuracy
D) Existences3ors3occurrence
E) Alls3ofs3theses3ares3assertionss3identifieds3ins3ASs32201.
16) Whens3testings3thes3completenesss3assertions3fors3as3liabilitys3account,s3ans3auditors3ordinari
lys3workss3froms3the
A) financials3statementss3tos3thes3potentiallys3unrecordeds3items.
B) potentiallys3unrecordeds3itemss3tos3thes3financials3statements.
C) accountings3recordss3tos3thes3supportings3evidence.
D) trials3balances3tos3thes3subsidiarys3ledger.
17) Ifs3ans3auditors3iss3performings3proceduress3relateds3tos3thes3informations3thats3iss3contained
s3ins3thes3client'ss3pensions3footnote,s3he/shes3iss3mosts3likelys3tos3obtains3evidences3concerni
ngs3management'ss3assertions3about
A) rightss3ands3obligations.
B) existence.
C) valuation.
D) presentations3ands3disclosure.
4
