Exam 1: Auditing and Assurance Services

Which of the following is not included in The American Accounting Association (AAA)definition of auditing?

Which of the following is an underlying condition that in part creates the demand by users for reliable information?

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

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

Define assurance,attestation,and auditing in the context of "lending credibility."

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 best describes the primary role and responsibility of independent external auditor?

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 questions would be inappropriate for an auditor to ask a client when exhibiting an appropriate level of professional skepticism while completing an audit procedure related to the internal control system?

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

If an auditor is performing procedures related to the information that is contained in the client's pension footnote,he/she is most likely obtain evidence concerning management's assertion about

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

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

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

Which of the following is not a recommendation usually made following the completion of an operational audit?

An auditor has substantial doubt about the entity's ability to continue as a going concern for a reasonable period of time because of negative cash flows and working capital deficiencies.Under these circumstances,the auditor would be most concerned about the

The audit objective that all the transactions and accounts presented in the financial statements represent real assets,liabilities,revenues,and expenses is related most closely to which of the PCAOB assertions?

Auditors are auditing the warehouse of Huge Lots Corporation.The auditors performed the audit procedures listed 1-5.For each audit procedure select the ASB balance assertion that is most likely being tested. A.Existence B.Rights and obligations C.Completeness D.Accuracy E.Valuation 1.The auditors walked through the warehouse looking for obsolete inventory. 2.The auditors compared invoices received from suppliers with the cost of inventory listed in the inventory accounts. 3.The auditors reviewed purchase orders to determine if any inventory was on consignment. 4.The auditors reviewed vendor invoices to determine if freight costs,taxes,tariffs or other costs had been included in inventory costs. 5.The auditors selected items from the inventory and reviewed inventory records to ensure these items were included in those records.

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.

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