1
Copyright © 2018 McGraw-Hill
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,Auditing & Assurance Services, 9e (Louwers) C
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hapter 1 Auditing and Assurance Services
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1) The audit objective that all transactions and accounts that should be presented in the financial
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statements are in fact included is related to which of the PCAOB assertions?
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A) Existence.
B) Rights and obligations. #t #t
C) Completeness.
D) Valuation. An #t
swer: C Difficult # t #t
y: 1 Easy #t #t
Topic: Management's Financial Statement Assertions
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Learning Objective: 01- #t # t
03 Describe and define the assertions that management makes about the recognition, measureme
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nt, presentation, and disclosure of the financial statements and explain why auditors use them as
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the focal point of the audit.
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Blooms: Remember # t
AACSB: Analytical Thinking Acce # t #t #t
ssibility: Keyboard Navigation # t #t
2) Cutoff tests designed to detect purchases made before the end of the year that have been
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recorded in the subsequent year provide assurance about management's assertion of:
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A) presentation and disclosure. #t #t
B) completeness.
C) rights and obligations. #t #t
D) existence. Answer #t
: B Difficulty: 2 Me
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dium
Topic: Management's Financial Statement Assertions
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Learning Objective: 01- #t # t
03 Describe and define the assertions that management makes about the recognition, measureme
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nt, presentation, and disclosure of the financial statements and explain why auditors use them as
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the focal point of the audit.
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Blooms: Remember # t
AACSB: Analytical Thinking Acce # t #t #t
ssibility: Keyboard Navigation # t #t
2
Copyright © 2018 McGraw-Hill
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,3) During an audit of an entity's stockholders' equity accounts, the auditor determines whether
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there are restrictions on retained earnings resulting from loans, agreements, or state law. This
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audit procedure most likely is intended to verify management's assertion of:
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A) existence or occurrence. #t #t
B) completeness.
C) valuation or allocation. #t #t
D) presentation and disclosure. #t #t #
Answer: D
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Difficulty: 2 Medium #t #t
Topic: Management's Financial Statement Assertions
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Learning Objective: 01- #t # t
03 Describe and define the assertions that management makes about the recognition, measureme
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nt, presentation, and disclosure of the financial statements and explain why auditors use them as
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the focal point of the audit.
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Blooms: Remember # t
AACSB: Analytical Thinking Acce # t #t #t
ssibility: Keyboard Navigation # t #t
4) The confirmation of an account payable balance selected from the general ledger provides
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primary evidence regarding which management assertion?
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A) Completeness.
B) Valuation.
C) Allocation.
D) Existence. Answe #t
r: D Difficulty: 2 Me
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dium
Topic: Management's Financial Statement Assertions
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Learning Objective: 01- #t # t
03 Describe and define the assertions that management makes about the recognition, measureme
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nt, presentation, and disclosure of the financial statements and explain why auditors use them as
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the focal point of the audit.
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Blooms: Remember # t
AACSB: Analytical Thinking Acce # t #t #t
ssibility: Keyboard Navigation # t #t
5) What type of evidence would provide the highest level of assurance in an attestation
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engagement?
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A) Evidence secured solely from within the entity.#t #t #t #t #t #t
B) Evidence obtained from independent sources. #t #t #t #t
C) Evidence obtained indirectly. #t #t
D) Evidence obtained from multiple internal inquiries.
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Answer: B # t
Difficulty: 3 Hard #t #t
Topic: Auditing, Attestation, and Assurance Services
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Learning Objective: 01- #t # t
02 Define and contrast financial statement auditing, attestation, and assurance services.
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Blooms: Remember # t
3
Copyright © 2018 McGraw-Hill #t #t #t
, AACSB: Analytical Thinking Acce
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ssibility: Keyboard Navigation
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4
Copyright © 2018 McGraw-Hill
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Copyright © 2018 McGraw-Hill
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,Auditing & Assurance Services, 9e (Louwers) C
#t #t #t #t #t #t
hapter 1 Auditing and Assurance Services
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1) The audit objective that all transactions and accounts that should be presented in the financial
#t #t #t #t #t #t #t #t #t #t #t #t #t #t #
statements are in fact included is related to which of the PCAOB assertions?
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A) Existence.
B) Rights and obligations. #t #t
C) Completeness.
D) Valuation. An #t
swer: C Difficult # t #t
y: 1 Easy #t #t
Topic: Management's Financial Statement Assertions
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Learning Objective: 01- #t # t
03 Describe and define the assertions that management makes about the recognition, measureme
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nt, presentation, and disclosure of the financial statements and explain why auditors use them as
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the focal point of the audit.
t #t #t #t #t #t
Blooms: Remember # t
AACSB: Analytical Thinking Acce # t #t #t
ssibility: Keyboard Navigation # t #t
2) Cutoff tests designed to detect purchases made before the end of the year that have been
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recorded in the subsequent year provide assurance about management's assertion of:
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A) presentation and disclosure. #t #t
B) completeness.
C) rights and obligations. #t #t
D) existence. Answer #t
: B Difficulty: 2 Me
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dium
Topic: Management's Financial Statement Assertions
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Learning Objective: 01- #t # t
03 Describe and define the assertions that management makes about the recognition, measureme
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nt, presentation, and disclosure of the financial statements and explain why auditors use them as
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the focal point of the audit.
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Blooms: Remember # t
AACSB: Analytical Thinking Acce # t #t #t
ssibility: Keyboard Navigation # t #t
2
Copyright © 2018 McGraw-Hill
#t #t #t
,3) During an audit of an entity's stockholders' equity accounts, the auditor determines whether
#t #t #t #t #t #t #t #t #t #t #t #t #t
there are restrictions on retained earnings resulting from loans, agreements, or state law. This
#t #t #t #t #t #t #t #t #t #t #t #t #t #
audit procedure most likely is intended to verify management's assertion of:
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A) existence or occurrence. #t #t
B) completeness.
C) valuation or allocation. #t #t
D) presentation and disclosure. #t #t #
Answer: D
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Difficulty: 2 Medium #t #t
Topic: Management's Financial Statement Assertions
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Learning Objective: 01- #t # t
03 Describe and define the assertions that management makes about the recognition, measureme
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nt, presentation, and disclosure of the financial statements and explain why auditors use them as
#t #t #t #t #t #t #t #t #t #t #t #t #t #t #
the focal point of the audit.
t #t #t #t #t #t
Blooms: Remember # t
AACSB: Analytical Thinking Acce # t #t #t
ssibility: Keyboard Navigation # t #t
4) The confirmation of an account payable balance selected from the general ledger provides
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primary evidence regarding which management assertion?
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A) Completeness.
B) Valuation.
C) Allocation.
D) Existence. Answe #t
r: D Difficulty: 2 Me
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dium
Topic: Management's Financial Statement Assertions
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Learning Objective: 01- #t # t
03 Describe and define the assertions that management makes about the recognition, measureme
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nt, presentation, and disclosure of the financial statements and explain why auditors use them as
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the focal point of the audit.
t #t #t #t #t #t
Blooms: Remember # t
AACSB: Analytical Thinking Acce # t #t #t
ssibility: Keyboard Navigation # t #t
5) What type of evidence would provide the highest level of assurance in an attestation
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engagement?
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A) Evidence secured solely from within the entity.#t #t #t #t #t #t
B) Evidence obtained from independent sources. #t #t #t #t
C) Evidence obtained indirectly. #t #t
D) Evidence obtained from multiple internal inquiries.
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Answer: B # t
Difficulty: 3 Hard #t #t
Topic: Auditing, Attestation, and Assurance Services
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Learning Objective: 01- #t # t
02 Define and contrast financial statement auditing, attestation, and assurance services.
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Blooms: Remember # t
3
Copyright © 2018 McGraw-Hill #t #t #t
, AACSB: Analytical Thinking Acce
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ssibility: Keyboard Navigation
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4
Copyright © 2018 McGraw-Hill
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