Test Bank for Auditing & Assurance Services 9th Edition by Timothy Louwers, Jerry Strawser A+

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Copyright © 2018 McGraw-
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Hill

,Auditing & Assurance Services, 9e (Louwers)
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Chapter 1 Auditing and Assurance Services
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1) The audit objective that all transactions and accounts that should be presented in the financi
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al statements are in fact included is related to which of the PCAOB assertions?
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A) Existence.
B) Rights and obligations. Ri Ri


C) Completeness.
D) Valuation. An Ri


swer: C Difficul R i Ri


ty: 1 EasyRi Ri


Topic: Management's Financial Statement Assertions
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Learning Objective: 01- Ri R i


03 Describe and define the assertions that management makes about the recognition, measurem
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ent, presentation, and disclosure of the financial statements and explain why auditors use them
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as the focal point of the audit.
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Blooms: Remember R i


AACSB: Analytical Thinking Acc R i Ri Ri


essibility: Keyboard Navigation Ri Ri




2) Cutoff tests designed to detect purchases made before the end of the year that have be
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en recorded in the subsequent year provide assurance about management's assertion of:
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A) presentation and disclosure. Ri Ri


B) completeness.
C) rights and obligations. Ri Ri


D) existence. Answer Ri


: B Difficulty: 2 Me
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dium
Topic: Management's Financial Statement Assertions
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Learning Objective: 01- Ri R i


03 Describe and define the assertions that management makes about the recognition, measurem
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ent, presentation, and disclosure of the financial statements and explain why auditors use them
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as the focal point of the audit.
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Blooms: Remember R i


AACSB: Analytical Thinking Acc R i Ri Ri


essibility: Keyboard Navigation Ri Ri




2
Copyright © 2018 McGraw- Ri Ri Ri

Hill

, 3) During an audit of an entity's stockholders' equity accounts, the auditor determines wheth
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er there are restrictions on retained earnings resulting from loans, agreements, or state law.
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This audit procedure most likely is intended to verify management's assertion of:
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A) existence or occurrence. Ri Ri


B) completeness.
C) valuation or allocation. Ri Ri


D) presentation and disclosure. Ri Ri


Answer: D
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Difficulty: 2 Medium Ri Ri


Topic: Management's Financial Statement Assertions
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Learning Objective: 01- Ri R i


03 Describe and define the assertions that management makes about the recognition, measurem
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ent, presentation, and disclosure of the financial statements and explain why auditors use them
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as the focal point of the audit.
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Blooms: Remember R i


AACSB: Analytical Thinking Acc R i Ri Ri


essibility: Keyboard Navigation Ri Ri




4) The confirmation of an account payable balance selected from the general ledger provid
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es primary evidence regarding which management assertion?
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A) Completeness.
B) Valuation.
C) Allocation.
D) Existence. Answe Ri


r: D Difficulty: 2 M
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edium
Topic: Management's Financial Statement Assertions
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Learning Objective: 01- Ri R i


03 Describe and define the assertions that management makes about the recognition, measurem
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ent, presentation, and disclosure of the financial statements and explain why auditors use them
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as the focal point of the audit.
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Blooms: Remember R i


AACSB: Analytical Thinking Acc R i Ri Ri


essibility: Keyboard Navigation Ri Ri




5) What type of evidence would provide the highest level of assurance in an attestatio
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n engagement?
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A) Evidence secured solely from within the entity. Ri Ri Ri Ri Ri Ri


B) Evidence obtained from independent sources. Ri Ri Ri Ri


C) Evidence obtained indirectly. Ri Ri


D) Evidence obtained from multiple internal inquiries. Ri Ri Ri Ri Ri


Answer: B
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Difficulty: 3 Hard Ri Ri


Topic: Auditing, Attestation, and Assurance Services
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Learning Objective: 01- Ri R i


02 Define and contrast financial statement auditing, attestation, and assurance services.
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Blooms: Remember R i




3
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Hill