Question 1

The sufficiency of evidence refers to the quality of audit evidence.

Accepted Answer

The sufficiency of evidence refers to the quantity of audit evidence, not the quality. Quality is referred to as the appropriateness of the audit evidence.

Question 2

The auditor gathers audit evidence to test management's assertions.

Accepted Answer

The auditor's primary responsibility is to gather evidence that tests the fairness of the information contained in an entity's financial statements with respect to management's financial reporting assertions.

Question 3

Vouching is used primarily to test which of the following assertions about classes of transaction?
A) Occurrence.
B) Completeness.
C) Authorization.
D) Classification.

Accepted Answer

A

Question 4

Which of the following is an essential factor in evaluating the sufficiency of evidence? The evidence must
A) Be well documented and cross-referenced in the audit documents.
B) Be based on sources that are considered reliable.
C) Bear a direct relationship to the audit assertion.
D) Be persuasive enough to enable the auditor to form an opinion.

Accepted Answer

The answer of Which of the following is an essential...

Question 5

The auditor must use his or her professional judgment to determine the amount of audit evidence to be gathered.

Accepted Answer

The auditor must use professional judgment to determine the appropriate amount of audit evidence to gather based on the risks of material misstatement and the nature of the audit procedures being performed. This is a fundamental aspect of auditing and is required by auditing standards.

Question 6

Audit evidence includes only written information used by the auditor in arriving at an opinion about the fairness of financial statements.

Accepted Answer

Audit evidence includes not only written information, but also oral representations from management, physical evidence, and other forms of evidence gathered by the auditor in support of their opinion on the fairness of financial statements.

Question 7

A confirmation is used to
A) Verify the inventory count is correct.
B) Verify that a control is being observed.
C) Verify a representation from a third party.
D) Verify that a specific trend is correct.

Accepted Answer

Confirmations are typically used to verify information received from a third party, such as a customer or vendor. They are often used in the audit process to gather evidence about account balances or transactions. The other options listed are not typical uses of confirmations.

Question 8

The classification assertion refers to transactions and events being recorded in the correct accounting period.

Accepted Answer

The classification assertion refers to transactions and events being recorded in the proper accounts, not necessarily the timing or period in which they are recorded. The assertion related to the correct accounting period is the cutoff assertion.

Question 9

The cutoff assertion relates to whether transactions and events have been recorded in the correct accounting period.

Accepted Answer

The cutoff assertion is related to whether transactions and events have been recorded in the appropriate accounting period.

Question 10

The completeness assertion refers to ensuring that transactions and events that should have been recorded actually have been recorded.

Accepted Answer

The completeness assertion is one of the assertions used in auditing to ensure that all transactions and events that should have been recorded have actually been recorded, so it is true.

Question 11

Tracing is used primarily to test which of the following assertions about classes of transactions?
A) Occurrence.
B) Completeness.
C) Cutoff.
D) Classification.

Accepted Answer

Tracing is primarily used to test the completeness assertion, ensuring that all transactions that should have been recorded have been recorded.

Question 12

Which assertions may be tested for the "transactions and events" category of management assertions?
A) Existence, completeness, rights and obligations, accuracy, cutoff and classification.
B) Occurrence, completeness, rights and obligations, accuracy, cutoff and classification.
C) Occurrence, completeness, authorization, accuracy, cutoff and classification.
D) Existence, rights and obligations, accuracy, authorization, and completeness.

Accepted Answer

The answer of Which assertions may be tested for the...

Question 13

In testing plant and equipment balances,an auditor may physically inspect new additions listed on the summary of plant and equipment transactions for the year.This procedure is designed to obtain evidence concerning management's assertions about classes of transactions and events,and specifically,which assertion?
A) Occurrence.
B) Cutoff.
C) Authorization.
D) Classification.

Accepted Answer

The physical inspection of new additions listed on the summary of plant and equipment transactions is designed to verify the occurrence assertion, which states that the transactions and events actually took place and pertain to the entity. By physically inspecting the plant and equipment, the auditor can determine if they exist and therefore confirm that the transaction actually occurred.

Question 14

Audit procedures are designed to test management assertions.

Accepted Answer

Audit procedures are specifically designed to obtain evidence to support or refute management assertions about financial statement disclosures and related assertions.

Question 15

Which assertions may be tested for the "presentation and disclosure" category of management assertions?
A) Existence, rights and obligations, cutoff and classification, completeness, accuracy and valuation.
B) Occurrence, rights and obligations, existence, accuracy and valuation, cutoff and classification.
C) Occurrence, completeness, classification and understandability, cutoff and classification.
D) Occurrence, rights and obligations, completeness, classification and understandability, accuracy and valuation.

Accepted Answer

The presentation and disclosure category of management assertions includes the assertions of occurrence, rights and obligations, completeness, classification and understandability, accuracy and valuation. Therefore, choice D is the best option. The other choices either include assertions that are not relevant to this category or miss out on some of the relevant assertions.

Question 16

Which set of assertions is tested when,during completion of the audit,the audit partner conducts a final review of the format of the entity's balance sheet?
A) Assertions about classes of transactions and events.
B) Assertions about account balances at the period end.
C) Assertions about presentation and disclosure.
D) None of the above.

Accepted Answer

The final review of the format of the entity's balance sheet relates to the presentation and disclosure assertions, which ensure that the financial statements are properly presented and that all required disclosures are included. Assertions about classes of transactions and events and assertions about account balances at period end relate to the completeness, accuracy, and existence of transactions and balances.

Question 17

Which assertions may be tested for the "account balances" category of management assertions?
A) Existence, accuracy, rights and obligations, completeness.
B) Existence, rights and obligations, completeness, valuation and allocation.
C) Occurrence, rights and obligations, completeness, valuation and allocation.
D) Occurrence, accuracy, rights and obligations, completeness.

Accepted Answer

Account balances relate to the financial transactions and events that occur within an accounting period. The management assertions for account balances are:

1. Existence - account balances actually exist at the balance sheet date.
2. Rights and obligations - the entity has legal ownership or access to assets and the obligation to repay liabilities.
3. Completeness - all account balances and transactions have been recorded and disclosed in financial statements.
4. Valuation and allocation - account balances are valued and allocated in accordance with GAAP.

Therefore, Choice B - Existence, rights and obligations, completeness, valuation and allocation - best represents the management assertions for account balances.

Question 18

Management assertions fall into four main categories.

Accepted Answer

Management assertions fall into five main categories: existence or occurrence, completeness, rights and obligations, valuation or allocation, and presentation and disclosure.

Question 19

Which of the following elements ultimately determines the amount of audit work that is necessary in the circumstances to afford a reasonable basis for an opinion?
A) Auditor judgment.
B) Materiality.
C) Relative risk.
D) Reasonable assurance.

Accepted Answer

The answer of Which of the following elements ultimately determines...

Question 20

The relevance of audit evidence or specific audit procedures depends on the assertion being tested.

Accepted Answer

This statement is true. The relevance of audit evidence or specific audit procedures depends on the assertion being tested. Different assertions may require different types of evidence or procedures to gather sufficient audit evidence. For example, if the assertion being tested is completeness, the auditor may need to perform a test of details to ensure that all transactions have been recorded in the financial statements. Conversely, if the assertion being tested is valuation, the auditor may need to perform a valuation test to determine if assets are properly valued in the financial statements.

Quiz 5: Evidence and Documentation

The sufficiency of evidence refers to the quality of audit evidence.

The auditor gathers audit evidence to test management's assertions.

Vouching is used primarily to test which of the following assertions about classes of transaction?

Which of the following is an essential factor in evaluating the sufficiency of evidence? The evidence must

The auditor must use his or her professional judgment to determine the amount of audit evidence to be gathered.

Audit evidence includes only written information used by the auditor in arriving at an opinion about the fairness of financial statements.

A confirmation is used to

The classification assertion refers to transactions and events being recorded in the correct accounting period.

The cutoff assertion relates to whether transactions and events have been recorded in the correct accounting period.

The completeness assertion refers to ensuring that transactions and events that should have been recorded actually have been recorded.

Tracing is used primarily to test which of the following assertions about classes of transactions?

Which assertions may be tested for the "transactions and events" category of management assertions?

Audit procedures are designed to test management assertions.

Which assertions may be tested for the "presentation and disclosure" category of management assertions?

Which set of assertions is tested when,during completion of the audit,the audit partner conducts a final review of the format of the entity's balance sheet?

Which assertions may be tested for the "account balances" category of management assertions?

Management assertions fall into four main categories.

Which of the following elements ultimately determines the amount of audit work that is necessary in the circumstances to afford a reasonable basis for an opinion?

The relevance of audit evidence or specific audit procedures depends on the assertion being tested.