Question 1

The effect of a violation of the completeness transaction-related audit objective for cash disbursements transactions would be an overstatement of cash disbursements.

Accepted Answer

The violation of the completeness objective for cash disbursements transactions would likely result in an understatement of cash disbursements, as completeness ensures that all transactions that should have been recorded have been recorded.

Question 2

The posting and summarization audit objective are the auditor's counterpart to management's assertion of

Accepted Answer

The posting and summarization audit objective ensures that transactions are recorded in the correct amounts, which corresponds to management's assertion of accuracy.

Question 3

In testing for cutoff, the objective is to determine

Accepted Answer

The objective of testing for cutoff is to determine whether transactions are recorded in the correct accounting period. This is important for accurate financial reporting and to ensure that financial statements present a true and fair view of the company's financial position and performance. Cutoff testing is focused on ensuring that transactions are properly recorded in the correct period, which can help prevent errors, misstatements, or fraudulent activities. Therefore, option B is the best choice.

Question 4

Balance-related audit objectives follow from management assertions.

Accepted Answer

Balance-related audit objectives are derived from management assertions related to financial statements, such as completeness, accuracy, and existence. Therefore, the statement is true.

Question 5

Which of the following statements is not true?

Accepted Answer

Balance-related audit objectives typically focus on the ending balance of balance sheet accounts to ensure they are fairly stated at the period end. They do not usually apply to both beginning and ending balances, which is what makes option D incorrect.

Question 6

The classification balance-related audit objective

Accepted Answer

The classification balance-related audit objective involves ensuring that transactions and balances are recorded in the appropriate accounts, which aligns with choice A, where it's about determining if items are included in the correct general ledger accounts.

Question 7

Balance-related audit objectives

Accepted Answer

Balance-related audit objectives provide guidance to auditors on the amount and type of evidence necessary to support account balances. They are essential in ensuring that financial statements are free from material misstatements and errors. While they may help detect fraud, this is not their primary objective. Balance-related audit objectives can apply to both balance sheet and income statement accounts, so option A is incorrect. Finally, there may be several specific-related audit objectives associated with each balance-related audit objective, making option D incorrect.

Question 8

Below are five audit procedures, all of which are tests of transactions associated with the audit of the sales and collection cycle. Also, below are the six general transaction-related audit objectives and the five management assertions. For each audit procedure, indicate (1) its audit objective, and (2) the management assertion being tested.
  1. Vouch recorded sales from the sales journal to the file of bills of lading.
(1) ________
(2) ________
2. Compare dates on the bill of lading, sales invoices, and sales journal to test for delays in recording sales transactions.
(1) ________
(2) ________
3. Account for the sequence of prenumbered bills of lading and sales invoices.
(1) ________
(2) ________
4. Trace from a sample of prelistings of cash receipts to the cash receipts journal, testing for names, amounts, and dates.
(1) ________
(2) ________
5. Examine customer order forms for credit approval by the credit manager.
(1) ________
(2) ________

Accepted Answer

The answer of Below are five audit procedures, all of...

Question 9

Balance-related audit objectives are usually applied to the ending balance in income statement accounts; transaction-related audit objectives are usually applied to transactions reflected in balance sheet accounts.

Accepted Answer

The statement is the opposite of what is true. Balance-related audit objectives are usually applied to the ending balance in balance sheet accounts, while transaction-related audit objectives are usually applied to transactions reflected in income statement accounts.

Question 10

The auditor is determining that the correct selling price was used for billing and that the quantity of goods shipped was the same as the quantity billed. She or he is gathering evidence about which transaction-related audit objective?

Accepted Answer

The auditor is determining that the correct selling price was used for billing which refers to the accuracy objective.

Question 11

The detail tie-in is part of the ________ assertion for account balances.

Accepted Answer

The valuation and allocation assertion relates to whether transactions have been recorded at the appropriate amount and allocated to the appropriate accounts. The detail tie-in is a test of this assertion, as it ensures that individual transactions are properly recorded and allocated to the correct account balances.

Question 12

The detail tie-in objective is not concerned that the details in the account balance

Accepted Answer

The detail tie-in objective is primarily concerned with ensuring that details in the account balance agree with related subsidiary ledger amounts, foot to the total in the account balance, and agree with the total in the general ledger. Proper disclosure in accordance with GAAP is not part of the detail tie-in objective.

Question 13

________ deals with potential overstatement and ________ deals with understatements (unrecorded transactions).

Accepted Answer

Occurrence deals with the risk that transactions or events that have been recorded or disclosed have not occurred or do not pertain to the entity (overstatement), while completeness deals with the risk that all transactions and events that should have been recorded have not been recorded (understatement or unrecorded transactions).

Question 14

General transaction-related audit objectives vary from audit to audit, depending on the nature and characteristics of the client's business and industry.

Accepted Answer

The answer of General transaction-related audit objectives vary from audit...

Question 15

The transaction-related audit objective of timing is related to the assertion of cutoff.

Accepted Answer

The transaction-related audit objective of timing is indeed related to the assertion of cutoff. This objective focuses on ensuring that transactions are recorded in the correct period and that the financial statements reflect the appropriate amounts and disclosures for the period in question. Cutoff is an important part of this objective, as it ensures that transactions are recorded in the correct accounting period and that revenue or expenses are recognized in the appropriate period.

Question 16

The audit objective of posting and summarization is associated with the management assertion of accuracy.

Accepted Answer

Posting and summarization involves ensuring that all transactions have been accurately recorded in the correct accounts, and that the balances in those accounts have been properly summarized. This relates to the management assertion of accuracy, which is concerned with whether financial statements are free from material misstatements.

Question 17

Below are five audit procedures, all of which are tests of transactions associated with the audit of the acquisition and payment cycle. Also, below are the six general transaction-related audit objectives and the five management assertions. For each audit procedure, indicate (1) its audit objective, and (2) the management assertion being tested.
  1. Foot the purchases journal and trace the totals to the related general ledger accounts.
(1) ________
(2) ________
2. Recompute the cash discounts taken by the client.
(1) ________
(2) ________
3. Compare dates on cancelled checks with the bank cancellation date.
(1) ________
(2) ________
4. Trace from a sample of cancelled checks to the cash disbursements journal.
(1) ________
(2) ________
5. Examine supporting documentation for a sample of transactions for authorized payee and amount and to determine services or goods were received.
(1) ________
(2) ________

Accepted Answer

The answer of Below are five audit procedures, all of...

Question 18

If a sale was for a valid shipment, but the amount of the sales invoice was calculated incorrectly, the accuracy objective was violated.

Accepted Answer

If the amount of the sales invoice was calculated incorrectly, it means that the accuracy objective was not met as the financial information was not recorded or processed accurately. However, if the shipment was valid, the validity objective was met.

Question 19

In the context of the audit of sales, distinguish between the occurrence and completeness transaction-related audit objectives. State the effect on the sales account (overstatement or understatement) of a violation of each objective.

Accepted Answer

The answer of In the context of the audit of...

Question 20

The transaction-related audit objective that deals with whether recorded transactions have actually occurred is the completeness objective.

Accepted Answer

The audit objective that deals with whether recorded transactions have actually occurred is the "occurrence" objective, not the completeness objective. The completeness objective concerns whether all transactions that should have been recorded were actually recorded.

Quiz 6: Audit Responsibilities and Objectives

The effect of a violation of the completeness transaction-related audit objective for cash disbursements transactions would be an overstatement of cash disbursements.

The posting and summarization audit objective are the auditor's counterpart to management's assertion of

In testing for cutoff, the objective is to determine

Balance-related audit objectives follow from management assertions.

Which of the following statements is not true?

The classification balance-related audit objective

Balance-related audit objectives

Balance-related audit objectives are usually applied to the ending balance in income statement accounts; transaction-related audit objectives are usually applied to transactions reflected in balance sheet accounts.

The auditor is determining that the correct selling price was used for billing and that the quantity of goods shipped was the same as the quantity billed. She or he is gathering evidence about which transaction-related audit objective?

The detail tie-in is part of the ________ assertion for account balances.

The detail tie-in objective is not concerned that the details in the account balance

deals with potential overstatement and deals with understatements (unrecorded transactions) .

General transaction-related audit objectives vary from audit to audit, depending on the nature and characteristics of the client's business and industry.

The transaction-related audit objective of timing is related to the assertion of cutoff.

The audit objective of posting and summarization is associated with the management assertion of accuracy.

If a sale was for a valid shipment, but the amount of the sales invoice was calculated incorrectly, the accuracy objective was violated.

In the context of the audit of sales, distinguish between the occurrence and completeness transaction-related audit objectives. State the effect on the sales account (overstatement or understatement) of a violation of each objective.

The transaction-related audit objective that deals with whether recorded transactions have actually occurred is the completeness objective.

Quiz 6: Audit Responsibilities and Objectives

The effect of a violation of the completeness transaction-related audit objective for cash disbursements transactions would be an overstatement of cash disbursements.

The posting and summarization audit objective are the auditor's counterpart to management's assertion of

In testing for cutoff, the objective is to determine

Balance-related audit objectives follow from management assertions.

Which of the following statements is not true?

The classification balance-related audit objective

Balance-related audit objectives

Balance-related audit objectives are usually applied to the ending balance in income statement accounts; transaction-related audit objectives are usually applied to transactions reflected in balance sheet accounts.

The auditor is determining that the correct selling price was used for billing and that the quantity of goods shipped was the same as the quantity billed. She or he is gathering evidence about which transaction-related audit objective?

The detail tie-in is part of the ________ assertion for account balances.

The detail tie-in objective is not concerned that the details in the account balance

________ deals with potential overstatement and ________ deals with understatements (unrecorded transactions) .

General transaction-related audit objectives vary from audit to audit, depending on the nature and characteristics of the client's business and industry.

The transaction-related audit objective of timing is related to the assertion of cutoff.

The audit objective of posting and summarization is associated with the management assertion of accuracy.

If a sale was for a valid shipment, but the amount of the sales invoice was calculated incorrectly, the accuracy objective was violated.

In the context of the audit of sales, distinguish between the occurrence and completeness transaction-related audit objectives. State the effect on the sales account (overstatement or understatement) of a violation of each objective.

The transaction-related audit objective that deals with whether recorded transactions have actually occurred is the completeness objective.

deals with potential overstatement and deals with understatements (unrecorded transactions) .