ACC 139: Assurance and Audit Principles

Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

Student Activity Sheet;

ACC 139: Assurance and Audit Principles calculator;
pencil with eraser, ball
First Periodical Exam pen and Scantron Answer
Sheet

Instruction: Read and answer each question on a separate answer sheet. Erasure or
superimposition of any kind will render your answer incorrect.

The Practitioner’s Engagements and Overview of Audit (20 points)

1. Certain fundamental beliefs called "postulates" underlie auditing theory.

Which of the following is not a postulate of auditing?
a. No long-term conflict exists between the auditor and the management of
the enterprise under audit.
b. Economic assertions can be verified.
c. The auditor acts exclusively as an auditor.
d. An audit has a benefit only to the owners.

2. In all cases, audit reports must

a. Be signed by the individual who performed the audit procedures.
b. Certify the accuracy of the quantitative information which was audited.
c. Communicate the auditor’s finding to the general public.
d. Inform readers of the degree of correspondence between the quantifiable
information and the established criteria.

3. The auditor communicates the results of his or her work through the medium
of the
a. Engagement letter c. Management letter.
b. Audit report d. Financial statements.

4. As used in auditing, which of the following statements best describes

"assertions"?

a. Assertions are the representations of management as to the reliability of

the information system.
b. Assertions are the auditor's findings to be communicated in the audit
report.
c. Assertions are the representations of management as to the fairness of
the financial statements.
d. Assertions are found only in the footnotes to the financial statements.

5. The expertise that distinguishes auditors from accountants is in the

a. Ability to interpret generally accepted accounting principles.
b. Requirement to possess education beyond the Bachelor’s degree.
c. Accumulation and interpretation of evidence.
d. Ability to interpret ASC Statements.
 ACC 139: Assurance and Audit Principles

Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

6. The framework for auditing and related services as addressed by PSA excludes
a. Review c. Compilation
b. Tax services d. Agreed upon procedure

7. Any services in which the CPA firm issues a written communication that
express a conclusion with respect to the reliability of a written assertion
that is the responsibility of another party is a(n)
a. Accounting and bookkeeping service c. Attestation service
b. Management advisory service d. Tax service

8. The primary goal of the CPA in performing the attest function is to

a. Detect fraud
b. Examine individual transactions so that the auditor may certify as to
their validity
c. Determine whether the client's assertions are fairly stated
d. Assure the consistent application of correct accounting procedures

9. Which of the following criteria is unique to the independent auditor’s

attest function?
a. General competence
b. Familiarity with the particular industry of each client
c. Due professional care
d. Independence

10. The criteria for evaluating quantitative information vary. For

example, in the audit of historical financial statements by CPA firms, the
criteria are usually
a. Generally accepted auditing standards.
b. Generally accepted accounting principles.
c. Regulations of the Internal Revenue Service.
d. Regulations of the Securities and Exchange Commission.

11. Which of the following types of audit uses as its criteria laws and
regulations?
a. Operational audit c. Financial statement audit
b. Compliance audit d. Financial audit

12. Which one of the following is more difficult to evaluate objectively?

a. Efficiency and effectiveness of operations.
b. Compliance with government regulations.
c. Presentation of financial statements in accordance with generally
accepted accounting
principles.
d. All three of the above are equally difficult.

13. Independent auditing can best be described as a

a. Branch of accounting
b. Discipline that attests to the results of accounting and other operations
and data
c. Professional activity that measures and communicates financial and
 ACC 139: Assurance and Audit Principles

Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

business data
d. Regulatory function that prevents the issuance of improper financial
information

14. A financial statement audit:

a. Confirms that financial statement assertion are accurate.
b. Lends credibility to the financial statements.
c. Guarantees that financial statements are presented fairly.
d. Assures that fraud had been detected.

15. Which of the following is responsible for an entity’s financial

statements?
a. The entity’s management c. The entity’s audit committee
b. The entity’s internal auditors d. The entity’s board of directors

16. An audit can have a significant effect on

a. Information Risk c. Business Risk
b. The risk-free interest rate d. All of these

17. The main way(s) to reduce information risk is to have

a. The user verify the information
b. The user share the information risk with management
c. Audited financial statements provided
d. All of the above

18. Which of the following is an appraisal activity established within an

entity as a service to the entity?
a. External auditing c. Financial auditing
b. Internal auditing d. Compliance auditing

19. Because an examination in accordance with generally accepted auditing

standards is influenced by the possibility of material errors, the auditor
should conduct the examination with an attitude of
a. Professional responsiveness c. Objective judgment
b. Conservative advocacy d. Professional skepticism

20. Which of the following best describes why an independent auditor

reports on financial statements?
a. Independent auditors are likely to detect fraud
b. Competing interests may exist between management and the users of the
statements
c. Misstated account balances are generally corrected by an independent
audit.
d. Ineffective internal controls may exist.

GAAS and Quality Control (10 points)

21. A basic objective of a CPA firm is to provide professional services

that conform with professional standards. Reasonable assurance of achieving
this basic objective is provided through
 ACC 139: Assurance and Audit Principles

Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

a. A system of peer review.

b. Continuing professional education.
c. A system of quality controls.
d. Compliance with generally accepted reporting standards.

22. The examination by CPAs of a CPA firm’s auditing practices to

ascertain compliance with its quality control system
a. Compliance audit c. Peer review
b. Examination d. Quality control audit

23. Quality control policies and procedures are required to be implemented

at
A B C D
• Audit firm level Yes Yes No No
• Individual audit level Yes No Yes No

24. Which of the following is not a standard of field work under GAAS?
a. Planning
b. Consideration of Internal Control
c. Evidential Matter
d. Professional care

25. Which of the following is not considered under the general standards
under GAAS?
a. Technical training and proficiency
b. Independence
c. GAAP
d. Professional care

26. Standards of reporting under GAAS include

a. Planning
b. Professional care
c. Consistency
d. Disclosure

27. These standards should be looked as MINIMUM STANDARD of performance

that auditors should follow.
a. GAAP
b. GAAS
c. Internal Control
d. Independence

28. It establishes the independent auditor’s overall responsibilities when

conducting an audit of financial statements
a. PSA
b. PFRS
c. AASC
d. GAAS

29. Which of the following is not an element of quality control under PSA
 ACC 139: Assurance and Audit Principles

Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

220?
a. Human Resource and Assignment
b. Engagement Performance
c. Internal Control
d. Monitoring

30. Which of the following statements is true about quality control and
GAAS?
a. Independence is a standard of field work under GAAS.
b. Quality controls are policies and procedures that can be adopted to
provide a guarantee in confirming with professional standards.
c. The BIR requires all CPA firms and individuals in public practice to
obtain a certificate of accreditation to practice public accountancy.
d. The Quality Review Committee was created by the PRC to conduct quality
review on applicants for registration to practice public accountancy.

Preliminary Engagement Activities (10 pts)

31. Which of the following is not one of the reasons why auditor should
perform preliminary engagement activities?
a. To ensure that the auditor maintains the necessary independence and
ability to perform the engagement.
b. To help ensure that there are no issues with management integrity that
may affect the auditor's willingness to continue the engagement.
c. To ensure that 'there is no misunderstanding with the client as to the
terms of the engagement.
d. To ensure that sufficient appropriate evidence will be obtained to
support the auditor's Opinion on the financial statements.

32. An auditor who accepts an audit engagement and does not possess the
industry expertise of the business entity should
a. Engage financial experts familiar with the nature of the business
entity
b. Obtain knowledge of matters that relate to the nature of the entity's
business
c. Refer a substantial portion of the audit to another CPA who will act
as the principal auditor
d. Inform the client that an unqualified opinion cannot be expressed.

33. Preliminary knowledge about the client's business and industry must be
obtained prior to the acceptance of the engagement primarily to
a. Determine the degree of knowledge and expertise required by the
engagement.
b. Determine the integrity of management.
c. Determine whether the firm is independent of the client.
d. Gather evidence about the fairness of the financial statements.

34. Which of the following factors most likely would cause an auditor not
to accept a new audit engagement?
a. An inadequate understanding of the entity's internal control structure
 ACC 139: Assurance and Audit Principles

Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

b. The close proximity to the end of the entity's fiscal year

c. Concluding that the entity's management probably lacks integrity
d. An inability to perform preliminary analytical procedures before
assessing control risk

35. Which of the following factors most likely would influence an

auditor's determination of the auditability of the entity's financial
statements?
a. The complexity of the accounting system
b. The existence of related party transactions
c. The adequacy of the accounting records
d. The operating effectiveness of control procedures

36. Engagement letter that documents and confirms the auditor's acceptance
of the engagement would normally be sent to the client.
a. before the audit report is issued
b. after the audit report is issued
c. at the end of fieldwork
d. before the commencement of the engagement

37. The primary reason an engagement letter is obtained by audit firms

prior to starting the work is that
a. it clarifies the responsibilities of management and those of the
auditor.
b. it defines the firm's policies and procedures regarding new clients.
c. it assures that all misstatements will be detected by the auditor.
d. it communicates the type of opinion that will be rendered on the
engagement"

38. Which of the following would be least likely to be included in the

auditor's engagement letter
a. Forms of the report
b. Extent of his responsibilities to his client
c. Objectives and scope of the audit
d. Type of opinion to be issued

39. An engagement letter would not normally include

a. billing arrangement
b. arrangement concerning client's assistance
c. details of the procedure that will be performed
d. expectation of receiving a representation letter from management

40. According to PSA 210, the auditor and the client should agree on the
terms of engagement. The agreed terms would need to be recorded in
a. memorandum to be placed in the permanent section of the auditing
working papers
b. engagement letter
c. client representation letter
d. comfort letter
 ACC 139: Assurance and Audit Principles

Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

Planning an Audit / Materiality (10 pts)

41. Adequate planning of the audit work helps the auditor of accomplishing
the following objectives,except:
a. Gathering of all corroborating audit evidence.
b. Ensuring that appropriate attention is devoted to important areas of the
audit.
c. Identifying the areas that need a service of an expert.
d. The audit work is completed efficiently.

42. The extent of planning will vary according to any of the following,
except:
a. Size of the audit client.
b. Auditor’s experience with the entity and knowledge of the business.
c. The nature and complexity of the audit engagement
d. The assessed level of control risk.

43. Which of the following is not considered by the CPA when he makes an
overall audit plan?
a. Identification of complex accounting areas including those involving
accounting estimates.
b. The information technology used by the client.
c. The content of the representation letters.
d. The nature and timing of reports or other communication with the entity
that are expected under the engagement.

44. Audit plan should

A. Precede action
B. Be fixed
C. Be cost beneficial

A B C D
Yes No Yes No
Yes No No Yes
Yes Yes Yes Yes

45. The development of a general strategy and a detailed approach for the
expected nature, timing, and extent of audit refers to:
a. Supervision b. Audit procedures c. Directing d. Planning

46. Which of the following concepts is most useful in assessing the scope
of an auditor's program relating to various accounts?
a. Attribute sampling
b. Materiality.
c. The reliability of information
d. Management fraud

47. In developing the preliminary level of materiality in an audit, the

auditor will
a. Look to audit standards for specific materiality guidelines
 ACC 139: Assurance and Audit Principles

Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

b. Increase the level of materiality if fraud is suspected

c. Rely primarily on professional judgment to determine the materiality
level
d. Use the same materiality level as that used for different clients in
the same industry

48. In determining the type of opinion to express, an auditor assesses the

nature of the reporting qualifications and the materiality of their effects.
Materiality will be the primary factor to be considered in the choice
between
a. an "except for opinion" and an adverse opinion
b. an adverse opinion and a disclaimer of opinion
c. an "except for" opinion and a "subject to" opinion
d. a qualified opinion and "piecemeal of opinion"

49. Which of the following underlies the application of generally accepted

auditing standards, particularly the standards of fieldwork and reporting?
a. The element of materiality and relative risk
b. The element of corroborating evidence
c. The element of internal control structure
d. The element of reasonable assurance

50. Why should the auditor plan more work on individual accounts as lower
acceptable levels of both audit risk and materiality are established?
a. To find smaller errors
b. To find larger errors
c. To increase the tolerable error in the accounts
d. To decrease the risk of overreliance

Audit Evidence and Documentation (10 pts)

51. The auditor obtains audit evidence to draw reasonable conclusions on

which to base the audit opinion by performing audit procedures to:
a. Obtain an understanding of the entity and its environment, including its
internal control, to assess the risks of material misstatement at the financial
statement and assertion levels.
b. Test the operating effectiveness of controls in preventing, or detecting and
correcting, material misstatements at the assertion level.
c. Detect material misstatements at the assertion level.
d. All of the above.

52. The auditor is not always required to perform

a. Risk assessment procedures. c. Substantive procedures.
b. Test of controls. d. Both a and c

53. Which statement is incorrect regarding audit evidence?

a. Audit evidence is all the information used by the auditor in arriving at the
conclusions on which the audit opinion is based.
b. Audit evidence includes the information contained in the accounting records
 ACC 139: Assurance and Audit Principles

Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

underlying the financial statements and other information.

c. Audit evidence is cumulative in nature.
d. Auditors are expected to address all information that may exist.

54. Which of the following audit procedures is used extensively throughout

the audit and often is
complementary to performing other audit procedures?
a. Inspection b. Observation c. Inquiry d. Confirmation

55. Observation
a. Consists of looking at a process or procedure being performed by others.
b. Consists of seeking information of knowledgeable persons, both financial
and non-financial, throughout the entity or outside the entity.
c. Is the process of obtaining a representation of information or of an
existing condition directly from a third party.
d. Is the auditor’s independent execution of procedures or controls that
were originally performed as part of the entity’s internal control

56. This consists of checking the mathematical accuracy of documents or

records.
a. Reperformance b. Recalculation c. Confirmation d. Inspection

57. It means the materials prepared by and for or obtained and retained by
the auditor in connection with the performance of the audit.
a. Documentation c. Engagement letter
b. Audit evidence d. Audit report

58. Standardized working papers are often used, chiefly because they allow
working papers to be prepared more
a. Efficiently b. Professionally c. Neatly d. Accurately

59. Which of the following is the least required of the audit working
papers?
a. Substitute for the entity’s accounting records.
b. Confidentiality of information included in the working papers.
c. Safe custody of the working papers.
d. Retention for a period sufficient to meet the needs of the practice.

60. Which of the following is not a purpose of working papers?

a. Assist in the planning and performance of the audit.
b. Assist in the supervision and review of the audit work.
c. Record the audit evidence resulting from the audit work performed to
support the auditor’s opinion.
d. Support the client’s financial statements

Fraud, Error and Non-Compliance (10 pts)

61. Misstatements may emanate from

a. Error
b. Fraud
 ACC 139: Assurance and Audit Principles

Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

c. Non-compliance
d. All of these

62. Which of the following is not an example of an error?

a. Clerical mistakes
b. Inadvertent misapplication of accounting policies
c. Incorrect accounting estimates
d. Misrepresentation of effects of transactions

63. The auditor is concerned with fraud that causes a material

misstatement in the financial statements. There are two types of
intentional misstatements that are relevant to the auditor: misstatements
resulting from fraudulent financial reporting and misstatements resulting
from
a. Management fraud.
b. Employee fraud.
c. Misappropriation of assets.
d. Collusion within the entity or with third parties.

64. Which of the following conditions are generally present when

misstatements due to fraud occur?
I. Incentive or pressure.
II. Perceived opportunity.
III. Rationalization.
a. I and II only. c. I and III only.
b. II and III only. d. I, II, and III.

65. The primary responsibility for the prevention and detection of fraud
rests with
a. Those charged with governance of the entity.
b. Management of the entity.
c. Both those charged with governance of the entity and management.
d. The auditor.

66. Which of the following statements best describes an auditor’s

responsibility regarding misstatements?
a. An auditor should obtain reasonable assurance that the financial
statements taken as a whole are free from material misstatement, whether
caused by fraud or error.
b. An auditor should obtain absolute assurance that material
misstatements in the financial statements will be detected.
c. An auditor is responsible to detect material errors but has no
responsibility to detect material fraud that is concealed through employee
collusion or management override of internal control.
d. An auditor’s failure to detect a material misstatement resulting from
fraud is an indication of noncompliance with the requirements of the
Philippine Standards on Auditing (PSAs).

67. When obtaining an understanding of the entity and its environment,

including its internal control, the auditor may identify events or
 ACC 139: Assurance and Audit Principles

Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

conditions that indicate an incentive or pressure to commit fraud or provide

an opportunity to commit fraud. Such events or conditions are referred to
as
a. Fraud conditions. c. Fraudulent activities.
b. Fraud risk factors. d. Fraud environment.

68. Which of the following conditions or events may create

incentives/pressures to commit fraud?
a. Inadequate system of authorization and approval of transactions.
b. Lack of mandatory vacations for employees performing key control
functions.
c. Excessive pressure on management or operating personnel to meet
financial targets established by those charged with governance, including
sales or profitability incentive goals.
d. Inadequate access controls over automated records.

69. Because of the risk of material misstatement, an audit of financial

statements in accordance with PSAs should be planned and performed with an
attitude of
a. Impartial conservatism.
b. Objective judgment.
c. Independent integrity.
d. Professional skepticism.

70. Misstatements in the financial statements can arise from fraud or

error. The distinguishing factor between fraud and error is whether the
underlying action that results in the misstatement of the financial
statements is
I. Intentional or unintentional.
II. Rational or irrational.
a. I only c. Both I and II
b. II only d. Neither I nor II.

Understanding the Entity and Its Environment / Internal Control (10 pts)

71. A measure of how willing the auditor is to accept that the financial
statements may be materially misstated after the audit is completed and an
unmodified opinion has been issued is the
a. Inherent risk.
b. Acceptable audit risk.
c. Control risk.
d. Detection risk.

72. When inherent risk is high, there will need to be

A lower More evidence
assessment of audit risk. accumulated by the auditor.
a. Yes Yes
b. No No
c. Yes No
d. No Yes
 ACC 139: Assurance and Audit Principles

Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

73. Which of the following is not one of the three primary objectives of
effective internal control?
a. Reliability of financial reporting.
b. Efficiency and effectiveness of operations.
c. Compliance with laws and regulations.
d. Assurance of elimination of business risk.

74. Internal control can provide only reasonable assurance of achieving

entity control objective. One factor limiting the likelihood of achieving
those objectives is that
a. The auditor’s primary responsibility is the direction of fraud
b. The board of directors is active and independent
c. The cost of internal control should not exceed its benefit
d. Management monitors the internal control

75. The primary responsibility for establishing and maintaining an

internal control structure rests with
a. The external auditors
b. The internal auditors
c. Management
d. The controller or the treasurer

76. Which of the following is not an element of an entity’s internal

control structure?
a. Control risk
b. Control activities
c. Information and communication
d. The control environment

77. Proper segregation of functional responsibilities in an effective

structure of internal control calls for separation for separation of the
function of
a. Authorization, execution, and payment
b. Authorization, recording, and custody
c. Custody, execution, and reporting
d. Authorization, payment, and recording

78. Which of the following is an element of internal control system?

Control Environment Control Activities
a. YES YES
b. YES NO
c. NO NO
d. NO YES

79. The susceptibility of an account to misstatements assuming no internal

control is referred to as the
a. Inherent risk
b. Control risk
c. Detection risk
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Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

d. Audit risk

80. In assessing control risk, the auditor must, as a minimum

a. Perform tests of all significant controls
b. Obtain an understanding of the design and implementation of the
client’s internal control
c. Obtain an understanding of the design of the client’s internal
control.
d. Obtain an understanding of the design, implementation, and operation
of effectiveness of the client’s internal control.

Identifying and Assessing Risk of Material Misstatements (10 pts)

81. As the acceptable level of detection risk decreases the auditor may
a. Perform tests of control at year end rather than at interim
b. Increase the level of inherent and control risks
c. Design more effective substantive procedures
d. Use larger sample size for tests of controls

82. Risk in auditing means that the auditor accepts some level of
uncertainty in performing the audit function. An effective auditor will
a. take any means available to reduce the risk to the lowest possible
level.
b. set the risk level between 5% and 10%.
c. Perform the audit procedures first and quantitatively set the risk
level before forming an opinion and writing the report.
d. Recognize that risk exists and deal with them in an appropriate
manner.

83. Inherent risk and control risk differ from detection risk in that they
a. Arise from the misapplication of auditing procedures.
b. May be assessed in either quantitative or nonquantitative terms.
c. Exist independently of the financial statement audit.
d. Can be changed at the auditor's discretion.

84. On the basis of the audit evidence gathered and evaluated, an auditor
decides to increase the assessed level of control risk from that originally
planned. To achieve an overall audit risk level that is substantially the
same as the planned audit risk level, the auditor would
a. Decrease substantive testing.
b. Increase inherent risk.
c. Decrease detection risk.
d. Increase materiality levels.

85. Which following would be considered the most conservative settings for
inherent risk and control risk?
Inherent Risk Control Risk
a. 1.0 1.0
b. 0.0 1.0
c. 1.0 0.0
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Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

d. 0.5 0.5

86. Audit risk consists of all but the following components:

a. Inherent risk
b. Detection risk
c. Substantive risk
d. Control risk

87. Which of the following models expresses the general relationship of

the auditor's assessments of control risk (CR) and inherent risk (IR), the
detection risk associated with analytical procedures and other relevant
substantive tests (DR), and overall allowable audit risk (AR) that would
lead the auditor to conclude that a substantive test of details of an
account balance is not necessary?
DR CR AR IR
a. 20% 40% 8% 100%
b. 10% 70% 4.5% 100%
c. 20% 60% 5% 100%
d. 30% 40% 5.5% 40%

88. Which of the following is an incorrect statement?

a. Detection risk is a function of the effectiveness of an auditing procedure
and its application.
b. Detection risk arises partly from uncertainties that exist when the auditor
does not examine 100 percent of the population.
c. Detection risk arises partly because of other uncertainties that exist even
if the auditor were to examine 100 percent of the population.
d. Detection risk exists independently of the audit of the financial
statements.

89. Regardless of the assessed level of control risk, the auditor would
perform some
a. Substantive tests to determine the effectiveness of internal control
policies
b. analytical review procedures to verify the design of internal control
procedures
c. substantive tests to restrict detection risk for significant
transaction classes
d. dual-purpose tests to evaluate both the risk of monetary misstatement
and preliminary control risk

90. Some account balances, such as those for pensions or leases, are the
results of complex calculations. The susceptibility to material
misstatements in these types of accounts is defined, as
a. Audit risk
b. Detection risk
c. Sampling risk
d. Inherent risk

Financial Statement Assertions (10 pts.)

 ACC 139: Assurance and Audit Principles

Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

91. Which of the following is not a management assertion?

a. Obligations classified as long-term liabilities in the balance sheet
will not mature within one year.
b. Property is recorded at historical cost and such cost is
systematically allocated to appropriate accounting periods.
c. Finished goods inventory in the balance sheet are available for sale.
d. Net income reflects the earnings power of the enterprise.

92. Balance sheet assertions include

a. Rights and obligations
b. Classification
c. Cut-off
d. Accuracy

93. Income statement assertions include

a. Valuation and allocation
b. Rights and obligations
c. Cut-off
d. All of these

94. Which of the following is addressed in balance, income statement and

presentation and disclosure assertions?
a. Completeness
b. Occurrence
c. Rights and obligation
d. Classification

95. “Trading securities are stated at fair value" is a management

assertion as to
a. Valuation or allocation
b. Completeness
c. Existence or occurrence
d. Rights and obligations

96. “The company has rights over all its property and equipment" is a
management assertion as to
a. Valuation or allocation
b. Completeness
c. Existence or occurrence
d. Rights and obligations

97. “That inventory quantities include all products, raw materials and
supplies on hand" is an audit objective relating to what management
assertions?
a. Valuation or allocation
b. Rights and obligations
c. Existence or occurrence
d. Completeness
 ACC 139: Assurance and Audit Principles

Name: ______________________________________________________ Class number: _____

Section: ____________ Schedule: ________________________________ Date: ____________

98. Confirmation of accounts receivable is a procedure that would most

likely obtain evidence concerning management's assertion of
a. Existence or occurrence
b. Completeness
c. Valuation or allocation
d. Presentation and disclosure

99. In evaluating the adequacy of the allowance for doubtful accounts, the
auditors' objective is to determine the validity of management's assertion
of
a. Existence or occurrence
b. Valuation and allocation
c. Completeness
d. Rights and obligations

100. In testing for cutoff, the objective is to determine

a. Whether all of the current period’s transactions are recorded
b. That no transactions from the prior period are included in the current
period’s balances
c. That no transactions of the current period have been delayed and
recorded in a future period.
d. Whether transactions are recorded in the proper period.

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