TEST BANK
Auditing & Assurance Services
Timothy Louwers
7th Edition
PR
O
FD
O
C
,Table of Contents
Chapter 1 Auditing and Assurance Services
Chapter 2 Professional Standards
Chapter 3 Engagement Planning
Chapter 4 Management Fraud and Audit Risk
Chapter 5 Risk Assessment: Internal Control Evaluation
Chapter 6 Employee Fraud and the Audit of Cash
Chapter 7 Revenue and Collection Cycle
Chapter 8 Acquisition and Expenditure Cycle
Chapter 9 Production Cycle
Chapter 10 Finance and Investment Cycle
PR
Chapter 11 Completing the Audit
Chapter 12 Reports on Audited Financial Statements
Module A Other Public Accounting Services
O
Module B Professional Ethics
Module C Legal Liability
FD
Module D Internal Audits, Governmental Audits, and Fraud Examinations
Module E Overview of Sampling
Module F Attributes Sampling
Module G Variables Sampling
O
Module H Auditing and Information Technology
C
,Auditing & Assurance Services, 7e (Louwers)
Chapter 1 Auditing and Assurance Services
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.
Answer: C
Difficulty: 1 Easy
Topic: Management's Financial Statement Assertions
Learning Objective: 01-03 Describe and define the assertions that management makes about the
recognition, measurement, presentation, and disclosure of the financial statements and explain
why auditors use them as the focal point of the audit.
PR
Blooms: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
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:
O
A) presentation and disclosure.
B) completeness.
C) rights and obligations.
FD
D) existence.
Answer: B
Difficulty: 2 Medium
Topic: Management's Financial Statement Assertions
Learning Objective: 01-03 Describe and define the assertions that management makes about the
recognition, measurement, presentation, and disclosure of the financial statements and explain
O
why auditors use them as the focal point of the audit.
Blooms: Remember
AACSB: Analytical Thinking
C
Accessibility: Keyboard Navigation
, 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.
Answer: D
Difficulty: 2 Medium
Topic: Management's Financial Statement Assertions
Learning Objective: 01-03 Describe and define the assertions that management makes about the
recognition, measurement, presentation, and disclosure of the financial statements and explain
why auditors use them as the focal point of the audit.
Blooms: Remember
AACSB: Analytical Thinking
PR
Accessibility: Keyboard Navigation
4) The confirmation of an account payable balance selected from the general ledger provides
primary evidence regarding which management assertion?
A) Completeness.
B) Valuation.
O
C) Allocation.
D) Existence.
Answer: D
FD
Difficulty: 2 Medium
Topic: Management's Financial Statement Assertions
Learning Objective: 01-03 Describe and define the assertions that management makes about the
recognition, measurement, presentation, and disclosure of the financial statements and explain
why auditors use them as the focal point of the audit.
Blooms: Remember
O
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
C
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.
Answer: B
Difficulty: 3 Hard
Topic: Auditing, Attestation, and Assurance Services
Learning Objective: 01-02 Define and contrast financial statement auditing, attestation, and
assurance services.
Blooms: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Auditing & Assurance Services
Timothy Louwers
7th Edition
PR
O
FD
O
C
,Table of Contents
Chapter 1 Auditing and Assurance Services
Chapter 2 Professional Standards
Chapter 3 Engagement Planning
Chapter 4 Management Fraud and Audit Risk
Chapter 5 Risk Assessment: Internal Control Evaluation
Chapter 6 Employee Fraud and the Audit of Cash
Chapter 7 Revenue and Collection Cycle
Chapter 8 Acquisition and Expenditure Cycle
Chapter 9 Production Cycle
Chapter 10 Finance and Investment Cycle
PR
Chapter 11 Completing the Audit
Chapter 12 Reports on Audited Financial Statements
Module A Other Public Accounting Services
O
Module B Professional Ethics
Module C Legal Liability
FD
Module D Internal Audits, Governmental Audits, and Fraud Examinations
Module E Overview of Sampling
Module F Attributes Sampling
Module G Variables Sampling
O
Module H Auditing and Information Technology
C
,Auditing & Assurance Services, 7e (Louwers)
Chapter 1 Auditing and Assurance Services
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.
Answer: C
Difficulty: 1 Easy
Topic: Management's Financial Statement Assertions
Learning Objective: 01-03 Describe and define the assertions that management makes about the
recognition, measurement, presentation, and disclosure of the financial statements and explain
why auditors use them as the focal point of the audit.
PR
Blooms: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
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:
O
A) presentation and disclosure.
B) completeness.
C) rights and obligations.
FD
D) existence.
Answer: B
Difficulty: 2 Medium
Topic: Management's Financial Statement Assertions
Learning Objective: 01-03 Describe and define the assertions that management makes about the
recognition, measurement, presentation, and disclosure of the financial statements and explain
O
why auditors use them as the focal point of the audit.
Blooms: Remember
AACSB: Analytical Thinking
C
Accessibility: Keyboard Navigation
, 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.
Answer: D
Difficulty: 2 Medium
Topic: Management's Financial Statement Assertions
Learning Objective: 01-03 Describe and define the assertions that management makes about the
recognition, measurement, presentation, and disclosure of the financial statements and explain
why auditors use them as the focal point of the audit.
Blooms: Remember
AACSB: Analytical Thinking
PR
Accessibility: Keyboard Navigation
4) The confirmation of an account payable balance selected from the general ledger provides
primary evidence regarding which management assertion?
A) Completeness.
B) Valuation.
O
C) Allocation.
D) Existence.
Answer: D
FD
Difficulty: 2 Medium
Topic: Management's Financial Statement Assertions
Learning Objective: 01-03 Describe and define the assertions that management makes about the
recognition, measurement, presentation, and disclosure of the financial statements and explain
why auditors use them as the focal point of the audit.
Blooms: Remember
O
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
C
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.
Answer: B
Difficulty: 3 Hard
Topic: Auditing, Attestation, and Assurance Services
Learning Objective: 01-02 Define and contrast financial statement auditing, attestation, and
assurance services.
Blooms: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
