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) Whicha3ofa3thea3followinga3isa3aa3managementa3assertiona3regardinga3accounta3balancesa3ata
3thea3perioda3end?
A) Transactionsa3anda3eventsa3thata3havea3beena3recordeda3havea3occurreda3anda3pert
aina3toa3thea3entity.
B) Transactionsa3anda3eventsa3havea3beena3recordeda3ina3thea3propera3accounts.
C) Thea3entitya3holdsa3ora3controlsa3thea3rightsa3toa3assets,a3anda3liabilitiesa3area3obligat
ionsa3ofa3thea3entity.
D) Amountsa3anda3othera3dataa3relateda3toa3thea3transactionsa3anda3eventsa3havea3bee
na3recordeda3appropriately.
11) Aa3practitionera3isa3engageda3toa3expressa3ana3opiniona3ona3management'sa3assertiona3thata3t
hea3squarea3footagea3ofa3aa3warehousea3offereda3fora3salea3isa3150,000a3squarea3feet.a3Thea3p
ractitionera3shoulda3refera3toa3whicha3ofa3thea3followinga3sourcesa3fora3professionala3guidan
ce?
A) Statementa3ofa3Auditinga3Standards.
B) Statementsa3ona3Standardsa3fora3Attestationa3Engagements.
C) Statementsa3ona3Standardsa3fora3Accountinga3anda3Reviewa3Services.
D) Statementsa3ona3Standardsa3fora3Consultinga3Services.
12) Ina3auditinga3thea3long-
terma3debta3account,a3ana3auditor'sa3proceduresa3mosta3likelya3woulda3focusa3primarilya3
ona3management'sa3assertiona3of
A) existence.
B) completeness.
C) allocation.
D) rightsa3anda3obligations.
13) Ana3auditora3selecteda3itemsa3fora3testa3countsa3froma3thea3client'sa3warehousea3duringa3thea3
physicala3inventorya3observation.a3Thea3auditora3thena3traceda3thesea3testa3countsa3intoa3thea3
detaileda3inventorya3listinga3thata3ultimatelya3agreeda3toa3thea3financiala3statements.a3Thisa3pr
ocedurea3mosta3likelya3provideda3evidencea3concerninga3management'sa3assertiona3of
A) completeness.
B) valuation.
C) presentationa3anda3disclosure.
D) existence.
E) rightsa3anda3obligations.
3
, 14) Ana3auditora3selecteda3itemsa3froma3thea3client'sa3detaileda3inventorya3listinga3(thata3agreeda3
toa3thea3financiala3statements).a3Duringa3thea3physicala3inventorya3observation,a3thea3auditora3
thena3founda3eacha3itema3selecteda3anda3counteda3thea3numbera3ofa3unitsa3ona3hand.a3Assumi
nga3thata3thea3amounta3ona3handa3wasa3thea3samea3asa3thea3amounta3ina3thea3client'sa3detailed
a3inventorya3listing,a3thisa3procedurea3mosta3likelya3woulda3providea3evidencea3concerninga3
management'sa3assertiona3of
A) completeness.
B) valuation.
C) presentationa3anda3disclosure.
D) existence.
E) rightsa3anda3obligations.
15) Accordinga3toa3PCAOBa3Auditinga3Standarda3No.a32201a3(a3ASa32201),a3thea3auditora3sho
ulda3identifya3significanta3accountsa3anda3disclosuresa3anda3theira3relevanta3assertions.a3W
hicha3ofa3thea3followinga3financiala3statementa3assertionsa3isa3nota3explicitlya3identifieda3i
na3ASa32201?
A) Completeness
B) Valuationa3ora3allocation
C) Accuracy
D) Existencea3ora3occurrence
E) Alla3ofa3thesea3area3assertionsa3identifieda3ina3ASa32201.
16) Whena3testinga3thea3completenessa3assertiona3fora3aa3liabilitya3account,a3ana3auditora3ordina
rilya3worksa3froma3the
A) financiala3statementsa3toa3thea3potentiallya3unrecordeda3items.
B) potentiallya3unrecordeda3itemsa3toa3thea3financiala3statements.
C) accountinga3recordsa3toa3thea3supportinga3evidence.
D) triala3balancea3toa3thea3subsidiarya3ledger.
17) Ifa3ana3auditora3isa3performinga3proceduresa3relateda3toa3thea3informationa3thata3isa3containe
da3ina3thea3client'sa3pensiona3footnote,a3he/shea3isa3mosta3likelya3toa3obtaina3evidencea3conce
rninga3management'sa3assertiona3about
A) rightsa3anda3obligations.
B) existence.
C) valuation.
D) presentationa3anda3disclosure.
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) Whicha3ofa3thea3followinga3isa3aa3managementa3assertiona3regardinga3accounta3balancesa3ata
3thea3perioda3end?
A) Transactionsa3anda3eventsa3thata3havea3beena3recordeda3havea3occurreda3anda3pert
aina3toa3thea3entity.
B) Transactionsa3anda3eventsa3havea3beena3recordeda3ina3thea3propera3accounts.
C) Thea3entitya3holdsa3ora3controlsa3thea3rightsa3toa3assets,a3anda3liabilitiesa3area3obligat
ionsa3ofa3thea3entity.
D) Amountsa3anda3othera3dataa3relateda3toa3thea3transactionsa3anda3eventsa3havea3bee
na3recordeda3appropriately.
11) Aa3practitionera3isa3engageda3toa3expressa3ana3opiniona3ona3management'sa3assertiona3thata3t
hea3squarea3footagea3ofa3aa3warehousea3offereda3fora3salea3isa3150,000a3squarea3feet.a3Thea3p
ractitionera3shoulda3refera3toa3whicha3ofa3thea3followinga3sourcesa3fora3professionala3guidan
ce?
A) Statementa3ofa3Auditinga3Standards.
B) Statementsa3ona3Standardsa3fora3Attestationa3Engagements.
C) Statementsa3ona3Standardsa3fora3Accountinga3anda3Reviewa3Services.
D) Statementsa3ona3Standardsa3fora3Consultinga3Services.
12) Ina3auditinga3thea3long-
terma3debta3account,a3ana3auditor'sa3proceduresa3mosta3likelya3woulda3focusa3primarilya3
ona3management'sa3assertiona3of
A) existence.
B) completeness.
C) allocation.
D) rightsa3anda3obligations.
13) Ana3auditora3selecteda3itemsa3fora3testa3countsa3froma3thea3client'sa3warehousea3duringa3thea3
physicala3inventorya3observation.a3Thea3auditora3thena3traceda3thesea3testa3countsa3intoa3thea3
detaileda3inventorya3listinga3thata3ultimatelya3agreeda3toa3thea3financiala3statements.a3Thisa3pr
ocedurea3mosta3likelya3provideda3evidencea3concerninga3management'sa3assertiona3of
A) completeness.
B) valuation.
C) presentationa3anda3disclosure.
D) existence.
E) rightsa3anda3obligations.
3
, 14) Ana3auditora3selecteda3itemsa3froma3thea3client'sa3detaileda3inventorya3listinga3(thata3agreeda3
toa3thea3financiala3statements).a3Duringa3thea3physicala3inventorya3observation,a3thea3auditora3
thena3founda3eacha3itema3selecteda3anda3counteda3thea3numbera3ofa3unitsa3ona3hand.a3Assumi
nga3thata3thea3amounta3ona3handa3wasa3thea3samea3asa3thea3amounta3ina3thea3client'sa3detailed
a3inventorya3listing,a3thisa3procedurea3mosta3likelya3woulda3providea3evidencea3concerninga3
management'sa3assertiona3of
A) completeness.
B) valuation.
C) presentationa3anda3disclosure.
D) existence.
E) rightsa3anda3obligations.
15) Accordinga3toa3PCAOBa3Auditinga3Standarda3No.a32201a3(a3ASa32201),a3thea3auditora3sho
ulda3identifya3significanta3accountsa3anda3disclosuresa3anda3theira3relevanta3assertions.a3W
hicha3ofa3thea3followinga3financiala3statementa3assertionsa3isa3nota3explicitlya3identifieda3i
na3ASa32201?
A) Completeness
B) Valuationa3ora3allocation
C) Accuracy
D) Existencea3ora3occurrence
E) Alla3ofa3thesea3area3assertionsa3identifieda3ina3ASa32201.
16) Whena3testinga3thea3completenessa3assertiona3fora3aa3liabilitya3account,a3ana3auditora3ordina
rilya3worksa3froma3the
A) financiala3statementsa3toa3thea3potentiallya3unrecordeda3items.
B) potentiallya3unrecordeda3itemsa3toa3thea3financiala3statements.
C) accountinga3recordsa3toa3thea3supportinga3evidence.
D) triala3balancea3toa3thea3subsidiarya3ledger.
17) Ifa3ana3auditora3isa3performinga3proceduresa3relateda3toa3thea3informationa3thata3isa3containe
da3ina3thea3client'sa3pensiona3footnote,a3he/shea3isa3mosta3likelya3toa3obtaina3evidencea3conce
rninga3management'sa3assertiona3about
A) rightsa3anda3obligations.
B) existence.
C) valuation.
D) presentationa3anda3disclosure.
4
