Exam 1: Auditing and Assurance Services

Cutoff tests designed to detect credit sales made before the end of the year that have been recorded in the subsequent year provide assurance about the PCAOB assertion of

ABC Company had a major sale to XYZ Company.This sale accounted for 20% of the revenue of ABC Company.The auditors performed the audit procedures listed 1-3.For each audit procedure select the ASB transaction assertion that is most likely being tested. A. Occurrence B. Completeness C. Cutoff D. Accuracy E. Classification 1. The auditor reviewed the shipping documents to check the date that product was shipped to XYZ Company. 2. The auditor reviewed the shipping documents to ensure that all product included in the sales revenue to XYZ had been shipped. 3. The auditor reviewed the invoice sent to XYZ Company to ensure that XYZ had been properly billed.

In order to be considered as external auditors with respect to government agencies,GAO auditors must be

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?

According to PCAOB Auditing Standard No.5 (AS 5),the auditor should identify significant accounts and disclosures and their relevant assertions.Which of the following financial statement assertions is not explicitly identified in AS 5?

The engineering department at Omni Company built a piece of equipment in the company's own shop for use in the company's operations.The auditor reviewed all work orders that were capitalized as part of the equipment costs.Which of the following is the ASB transaction assertion most closely related to the auditor's testing?

The risk an entity will fail to meet its objectives is referred to as

Which of the following best describes the main reason independent auditors report on management's financial statements?

What are the four basic requirements for becoming a CPA?

The audit objective that footnotes in the financial statements should be clear and expressed such that the information is easily conveyed to the readers of the financial statements is related most closely with which of the ASB presentation and disclosure assertions?

The study of business operations for the purpose of making recommendations about the efficient use of resources,effective achievement of business objectives,and compliance with company policies is referred to as

Which of the following is a management assertion regarding account balances at the period end?

Which of the following is the essential purpose of the audit function?

In performing an attestation engagement,a CPA typically

The audit objective that all balances include all items that should be recorded in that account is related most closely to which one of the ASB balance assertions?

Which of the following is not a PCAOB assertion about inventory related to presentation and disclosure?

An auditor selected items for test counts from the client's warehouse during the physical inventory observation.The auditor then traced these test counts into the detailed inventory listing that ultimately agreed to the financial statements.This procedure most likely provided evidence concerning management's assertion of

Because of the risk of material misstatement,an audit of financial statements in accordance with generally accepted auditing standards should be planned and performed with an attitude of

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

The confirmation of an account payable balance selected from the general ledger provides primary evidence regarding which management assertion?