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Auditing & Assurance Services Timothy Louwers 7th Edition - Test Bank
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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 oblig...

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  • September 15, 2023
  • 811
  • 2022/2023
  • Exam (elaborations)
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  • complete test bank
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  • auditing assurance services timothy louwers

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,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.
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:
A) presentation and disclosure.
B) completeness.
C) rights and obligations.
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
why auditors use them as the focal point of the audit.
Blooms: Remember
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation




1
Copyright © 2018 McGraw-Hill

,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
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.
C) Allocation.
D) Existence.
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
Accessibility: Keyboard Navigation

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
2
Copyright © 2018 McGraw-Hill

, 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.
Answer: D
Difficulty: 3 Hard
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
Accessibility: Keyboard Navigation

7) An auditor traces the serial numbers on equipment to a nonissuer's sub-ledger. 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.
Answer: B
Difficulty: 3 Hard
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
Accessibility: Keyboard Navigation




3
Copyright © 2018 McGraw-Hill

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