ESTUDYR
AUDITING AND ASSURANCE SERVICES 9TH EDITION, BY
TIMOTHY J. LOUWERS, PENELOPE BAGLEY| WITH ALL
CHAPTERS 1-12
1. Which of the following is an accurate statement regarding audit evidence?
A. Responses to the auditor's questions by client employees is considered highly
persuasive evidence.
B. Audit evidence should provide an absolute level of assurance.
C. The auditor uses evidence to determine whether the financial statements are fairly
presented.
D. All evidence must be highly persuasive.
Answer: C. Rationale: The auditor collects evidence to support conclusions about
whether the statements are presented fairly; evidence rarely provides absolute
assurance.
2. All evidence must have the same level of persuasiveness. True or False?
A. True
B. False
Answer: B. Rationale: Evidence differs in persuasiveness based on source, nature, and
circumstances.
3. Auditors use evidence to help them draw conclusions. True or False?
A. True
B. False
Answer: A. Rationale: The purpose of evidence is to enable auditors to form conclusions
about assertions.
4. Auditors must make decisions regarding what evidence to gather and how much to
accumulate. Which of the following is a decision auditors must make related to
evidence?
A. Sample size — Yes; Timing of audit procedures — Yes.
B. Sample size — No; Timing of audit procedures — No.
C. Sample size — Yes; Timing of audit procedures — No.
D. Sample size — No; Timing of audit procedures — Yes.
Answer: A. Rationale: Auditors decide what procedures, when to perform them
(timing), and sample sizes.
,ESTUDYR
5. When can audit procedures be performed?
A. Prior to the fiscal year-end of the client — Yes; Subsequent to the fiscal year-end —
Yes.
B. Prior to the fiscal year-end — No; Subsequent — No.
C. Prior to the fiscal year-end — Yes; Subsequent — No.
D. Prior to the fiscal year-end — No; Subsequent — Yes.
Answer: A. Rationale: Procedures can be performed both before and after year-end
(e.g., interim testing and year-end).
6. A(n) ________ is the detailed instruction that explains the audit evidence to be obtained
during the audit.
A. audit objective
B. audit procedure
C. audit assertion
D. audit program
Answer: B. Rationale: An audit procedure specifies the steps to obtain evidence to
address an audit objective.
7. Which of the following is NOT one of the four decisions about what evidence to gather
and how much to accumulate?
A. which audit procedures to use
B. which accounts must agree to the general ledger
C. when to perform the procedures
D. what sample size to select for a given procedure
Answer: B. Rationale: Deciding which accounts must agree to the GL is not one of the
standard four evidence decisions (procedures, items to test, timing, sample size).
8. When making audit evidence decisions, which statement is correct?
A. Auditor decides which items in population to test before determining sample size.
B. Sample size must remain constant audit-to-audit.
C. Audit engagement software can assist auditors in making evidence decisions.
D. Auditor is required to use PCAOB-determined sample sizes.
Answer: C. Rationale: Software can help plan, document, and evaluate evidence; sample
sizes vary and are auditor judgments.
9. An audit program is the list of audit procedures for an audit area or the entire audit.
True or False?
A. True
B. False
,ESTUDYR
Answer: A. Rationale: The audit program organizes planned procedures for each audit
area.
10. Audit evidence has two primary qualities: relevance and reliability. Which provides the
most reliable evidence among these choices?
A. general ledger account balances
B. confirmation of accounts receivable balance received from a customer
C. internal memo explaining issuance of a credit memo
D. copy of month-end adjusting entries
Answer: B. Rationale: External confirmations from independent third parties are highly
reliable.
11. Which of the following is NOT a characteristic of the reliability of evidence?
A. effectiveness of client internal controls
B. education of auditor
C. independence of information provider
D. timeliness
Answer: B. Rationale: Auditor education is important but is not a direct characteristic of
evidence reliability.
12. The auditor must gather sufficient and appropriate evidence. Sufficient evidence must:
A. be well documented and cross-referenced.
B. be based on external sources only.
C. provide evidence that prove or disprove an audit assertion.
D. be persuasive enough to enable the auditor to issue an audit report.
Answer: D. Rationale: Sufficiency is about quantity; evidence must be enough to
support the audit opinion.
13. Audit evidence obtained directly by the auditor will not be reliable if:
A. the auditor lacks the competence to evaluate the evidence.
B. it is provided by the client's attorney.
C. the client denies its veracity.
D. it is impossible to obtain corroboratory evidence.
Answer: A. Rationale: Direct evidence is strong only if the auditor has the competence
to gather and evaluate it.
14. Appropriateness of evidence is a measure of the:
A. quantity of evidence
B. quality of evidence
C. sufficiency of evidence
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D. meaning of evidence
Answer: B. Rationale: Appropriateness = relevance + reliability (quality).
15. Which statement regarding relevance of evidence is correct?
A. To be relevant, evidence must pertain to the audit objective of the evidence.
B. To be relevant, evidence must be persuasive.
C. To be relevant, evidence must relate to multiple audit objectives.
D. To be relevant, evidence must come from systems with effective controls.
Answer: A. Rationale: Relevance depends on whether the evidence addresses the
specific assertion being tested.
16. Two determinants of the persuasiveness of evidence are:
A. competence and sufficiency.
B. relevance and reliability.
C. appropriateness and sufficiency.
D. independence and effectiveness.
Answer: C. Rationale: Persuasiveness depends on appropriateness (quality) and
sufficiency (quantity).
17. The two characteristics of the appropriateness of evidence are:
A. relevance and timeliness.
B. relevance and accuracy.
C. relevance and reliability.
D. reliability and accuracy.
Answer: C. Rationale: Appropriateness comprises relevance and reliability.
18. Which form of evidence would be least persuasive for marketable securities and
investments?
A. responses to auditor's questions by the president and controller regarding
investments
B. correspondence with broker about investments held in street name
C. minutes of board authorizing stock purchases
D. auditor's count of marketable securities
Answer: A. (Least persuasive) Rationale: Management's verbal or internal responses are
less persuasive than external confirmations, minutes, or direct observation.
19. Which statement about sample sizes is NOT correct?
A. It is possible to vary sample size from one unit to 100% of the population.
B. Cost is an adequate justification for not gathering an adequate sample size.
C. The auditor must decide how many items to test for each procedure.
AUDITING AND ASSURANCE SERVICES 9TH EDITION, BY
TIMOTHY J. LOUWERS, PENELOPE BAGLEY| WITH ALL
CHAPTERS 1-12
1. Which of the following is an accurate statement regarding audit evidence?
A. Responses to the auditor's questions by client employees is considered highly
persuasive evidence.
B. Audit evidence should provide an absolute level of assurance.
C. The auditor uses evidence to determine whether the financial statements are fairly
presented.
D. All evidence must be highly persuasive.
Answer: C. Rationale: The auditor collects evidence to support conclusions about
whether the statements are presented fairly; evidence rarely provides absolute
assurance.
2. All evidence must have the same level of persuasiveness. True or False?
A. True
B. False
Answer: B. Rationale: Evidence differs in persuasiveness based on source, nature, and
circumstances.
3. Auditors use evidence to help them draw conclusions. True or False?
A. True
B. False
Answer: A. Rationale: The purpose of evidence is to enable auditors to form conclusions
about assertions.
4. Auditors must make decisions regarding what evidence to gather and how much to
accumulate. Which of the following is a decision auditors must make related to
evidence?
A. Sample size — Yes; Timing of audit procedures — Yes.
B. Sample size — No; Timing of audit procedures — No.
C. Sample size — Yes; Timing of audit procedures — No.
D. Sample size — No; Timing of audit procedures — Yes.
Answer: A. Rationale: Auditors decide what procedures, when to perform them
(timing), and sample sizes.
,ESTUDYR
5. When can audit procedures be performed?
A. Prior to the fiscal year-end of the client — Yes; Subsequent to the fiscal year-end —
Yes.
B. Prior to the fiscal year-end — No; Subsequent — No.
C. Prior to the fiscal year-end — Yes; Subsequent — No.
D. Prior to the fiscal year-end — No; Subsequent — Yes.
Answer: A. Rationale: Procedures can be performed both before and after year-end
(e.g., interim testing and year-end).
6. A(n) ________ is the detailed instruction that explains the audit evidence to be obtained
during the audit.
A. audit objective
B. audit procedure
C. audit assertion
D. audit program
Answer: B. Rationale: An audit procedure specifies the steps to obtain evidence to
address an audit objective.
7. Which of the following is NOT one of the four decisions about what evidence to gather
and how much to accumulate?
A. which audit procedures to use
B. which accounts must agree to the general ledger
C. when to perform the procedures
D. what sample size to select for a given procedure
Answer: B. Rationale: Deciding which accounts must agree to the GL is not one of the
standard four evidence decisions (procedures, items to test, timing, sample size).
8. When making audit evidence decisions, which statement is correct?
A. Auditor decides which items in population to test before determining sample size.
B. Sample size must remain constant audit-to-audit.
C. Audit engagement software can assist auditors in making evidence decisions.
D. Auditor is required to use PCAOB-determined sample sizes.
Answer: C. Rationale: Software can help plan, document, and evaluate evidence; sample
sizes vary and are auditor judgments.
9. An audit program is the list of audit procedures for an audit area or the entire audit.
True or False?
A. True
B. False
,ESTUDYR
Answer: A. Rationale: The audit program organizes planned procedures for each audit
area.
10. Audit evidence has two primary qualities: relevance and reliability. Which provides the
most reliable evidence among these choices?
A. general ledger account balances
B. confirmation of accounts receivable balance received from a customer
C. internal memo explaining issuance of a credit memo
D. copy of month-end adjusting entries
Answer: B. Rationale: External confirmations from independent third parties are highly
reliable.
11. Which of the following is NOT a characteristic of the reliability of evidence?
A. effectiveness of client internal controls
B. education of auditor
C. independence of information provider
D. timeliness
Answer: B. Rationale: Auditor education is important but is not a direct characteristic of
evidence reliability.
12. The auditor must gather sufficient and appropriate evidence. Sufficient evidence must:
A. be well documented and cross-referenced.
B. be based on external sources only.
C. provide evidence that prove or disprove an audit assertion.
D. be persuasive enough to enable the auditor to issue an audit report.
Answer: D. Rationale: Sufficiency is about quantity; evidence must be enough to
support the audit opinion.
13. Audit evidence obtained directly by the auditor will not be reliable if:
A. the auditor lacks the competence to evaluate the evidence.
B. it is provided by the client's attorney.
C. the client denies its veracity.
D. it is impossible to obtain corroboratory evidence.
Answer: A. Rationale: Direct evidence is strong only if the auditor has the competence
to gather and evaluate it.
14. Appropriateness of evidence is a measure of the:
A. quantity of evidence
B. quality of evidence
C. sufficiency of evidence
, ESTUDYR
D. meaning of evidence
Answer: B. Rationale: Appropriateness = relevance + reliability (quality).
15. Which statement regarding relevance of evidence is correct?
A. To be relevant, evidence must pertain to the audit objective of the evidence.
B. To be relevant, evidence must be persuasive.
C. To be relevant, evidence must relate to multiple audit objectives.
D. To be relevant, evidence must come from systems with effective controls.
Answer: A. Rationale: Relevance depends on whether the evidence addresses the
specific assertion being tested.
16. Two determinants of the persuasiveness of evidence are:
A. competence and sufficiency.
B. relevance and reliability.
C. appropriateness and sufficiency.
D. independence and effectiveness.
Answer: C. Rationale: Persuasiveness depends on appropriateness (quality) and
sufficiency (quantity).
17. The two characteristics of the appropriateness of evidence are:
A. relevance and timeliness.
B. relevance and accuracy.
C. relevance and reliability.
D. reliability and accuracy.
Answer: C. Rationale: Appropriateness comprises relevance and reliability.
18. Which form of evidence would be least persuasive for marketable securities and
investments?
A. responses to auditor's questions by the president and controller regarding
investments
B. correspondence with broker about investments held in street name
C. minutes of board authorizing stock purchases
D. auditor's count of marketable securities
Answer: A. (Least persuasive) Rationale: Management's verbal or internal responses are
less persuasive than external confirmations, minutes, or direct observation.
19. Which statement about sample sizes is NOT correct?
A. It is possible to vary sample size from one unit to 100% of the population.
B. Cost is an adequate justification for not gathering an adequate sample size.
C. The auditor must decide how many items to test for each procedure.
