Question 1

Which of the following substantive tests of cash account balances are always performed?

Accepted Answer

A)  Test cut-off of cash receipts, cash payments and transfers at year-end 
B)  Confirm cash held by others 
C)  Examine the client's bank reconciliations 
D)  All of the above 
A)  Test cut-off of cash receipts, cash payments and transfers at year-end 
B)  Confirm cash held by others 
C)  Examine the client's bank reconciliations 
D)  All of the above

Question 2

The rights and obligations assertion for inventory relates to which of the following audit objectives?

Accepted Answer

A)  Inventory is properly classified, described and disclosed in the financial statements. 
B)  The entity owns, or has the legal right to, all of the inventory on the balance sheet. 
C)  All inventory on the inventory listing is included in the financial statements. 
D)  All inventory owned by the entity at year-end is included on the balance sheet. 
A)  Inventory is properly classified, described and disclosed in the financial statements. 
B)  The entity owns, or has the legal right to, all of the inventory on the balance sheet. 
C)  All inventory on the inventory listing is included in the financial statements. 
D)  All inventory owned by the entity at year-end is included on the balance sheet.

Question 3

Can you help Rosa Chaput determine why there is some effort put into testing cash when the cash account is not material?

Accepted Answer

A)  because cash can be stolen easily 
B)  because cash has to be valued properly at year-end 
C)  because so many transactions flow through cash 
D)  none of the above 
A)  because cash can be stolen easily 
B)  because cash has to be valued properly at year-end 
C)  because so many transactions flow through cash 
D)  none of the above

Question 4

The timing of substantive testing is dependent on the risk assessment of the significant
account in question.

Accepted Answer

A) True 
 B)False

Question 5

Which are the two audit assertions considered most important to the auditor concluding there are no material misstatements in trade receivables at year-end?

Accepted Answer

A)  valuation and allocation, and rights and obligations 
B)  existence and occurrence 
C)  occurrence and rights and obligations 
D)  existence and valuation and allocation 
A)  valuation and allocation, and rights and obligations 
B)  existence and occurrence 
C)  occurrence and rights and obligations 
D)  existence and valuation and allocation

Question 6

Ensuring that all property, plant and equipment owned by the entity at year-end are included on the balance sheet relates to which assertion?

Accepted Answer

A)  rights and obligations 
B)  completeness 
C)  classification 
D)  existence 
A)  rights and obligations 
B)  completeness 
C)  classification 
D)  existence

Question 7

Prepayments are audited by vouching the balance to the supporting invoices.

Accepted Answer

A) True 
 B)False

Question 8

Anna Monticello tested the postings of the totals in the cash receipts journal to the general ledger, trade receivables sub-ledger and other subsidiary ledgers. Which assertion(s) was she
Fulfilling?

Accepted Answer

A)  completeness 
B)  valuation and allocation 
C)  accuracy 
D)  none of the above 
A)  completeness 
B)  valuation and allocation 
C)  accuracy 
D)  none of the above

Question 9

Ensuring that accounts payable are stated at the amounts owed at year-end relates to the
rights and obligations assertion.

Accepted Answer

A) True 
 B)False

Question 10

Miriam Bakeman recently performed procedures to evaluate whether client's internal control system is preventing or detecting a material misstatement. This is an example of

Accepted Answer

A)  testing detection risks. 
B)  testing inherent risks. 
C)  testing internal controls. 
D)  establishing materiality. 
A)  testing detection risks. 
B)  testing inherent risks. 
C)  testing internal controls. 
D)  establishing materiality.

Question 11

George Malinowski was trying to check whether the receivables of Cosentino Distributors were being carried at their net realizable value. His objective was to fulfill which assertion?

Accepted Answer

A)  completeness 
B)  valuation and allocation 
C)  existence 
D)  none of the above 
A)  completeness 
B)  valuation and allocation 
C)  existence 
D)  none of the above

Question 12

The key objective when performing substantive procedures is to determine whether there
are material misstatements within an account balance.

Accepted Answer

A) True 
 B)False

Question 13

The three audit assertions particularly important to enable the auditor to conclude that there are no material misstatements in cash as at year-end are:

Accepted Answer

A)  existence, completeness and classification. 
B)  rights and obligations, cut-off and occurrence. 
C)  occurrence, completeness and accuracy. 
D)  classification, occurrence and valuation. 
A)  existence, completeness and classification. 
B)  rights and obligations, cut-off and occurrence. 
C)  occurrence, completeness and accuracy. 
D)  classification, occurrence and valuation.

Question 14

Investments can be vouched to supporting external documentation such as:

Accepted Answer

A)  shares prices on the stock exchange. 
B)  investment statements from a bank. 
C)  both a and b. 
D)  none of the above. 
A)  shares prices on the stock exchange. 
B)  investment statements from a bank. 
C)  both a and b. 
D)  none of the above.

Question 15

Accounting for the numerical sequence of cheques issued during a specific period is a
substantive test relating to the purchases process.

Accepted Answer

A) True 
 B)False

Question 16

Priscille White was performing the review of cash transactions at Banker's Trust. Which three assertions are the most important when ensuring that there are no material misstatements
For cash at Banker's Trust?

Accepted Answer

A)  existence, completeness, valuation and allocation 
B)  existence, valuation and allocation, rights and obligations 
C)  existence, completeness, classification 
D)  none of the above 
A)  existence, completeness, valuation and allocation 
B)  existence, valuation and allocation, rights and obligations 
C)  existence, completeness, classification 
D)  none of the above

Question 17

Testing the mathematical accuracy of the cash disbursement journal relates to the existence
assertion.

Accepted Answer

A) True 
 B)False

Question 18

The valuation and allocation assertion relates to which of the following audit objectives?

Accepted Answer

A)  All accounts payable on the balance sheet are real accounts payable for goods received or services performed. 
B)  All accounts payable owed by the entity at year-end are included on the balance sheet. 
C)  Accounts payable are stated at the amounts owed at year-end. 
D)  Accounts payable are properly classified, described and disclosed in the financial statements. 
A)  All accounts payable on the balance sheet are real accounts payable for goods received or services performed. 
B)  All accounts payable owed by the entity at year-end are included on the balance sheet. 
C)  Accounts payable are stated at the amounts owed at year-end. 
D)  Accounts payable are properly classified, described and disclosed in the financial statements.

Question 19

Which of the following statements is incorrect?

Accepted Answer

A)  Equity typically does not move much in any given year. 
B)  Retained earnings is a complex calculation. 
C)  Provisions are difficult to audit via controls testing alone. 
D)  Intercompany balances are vouched to the related entity or to intercompany confirmations. 
A)  Equity typically does not move much in any given year. 
B)  Retained earnings is a complex calculation. 
C)  Provisions are difficult to audit via controls testing alone. 
D)  Intercompany balances are vouched to the related entity or to intercompany confirmations.

Question 20

Observing the client's inventory taking enables the auditor to establish that:

Accepted Answer

A)  count tags, sheets or cards are properly controlled. 
B)  the client's personnel are complying with the instructions for inventory counts. 
C)  items belonging to the client are accurately counted and recorded. 
D)  all of the above. 
A)  count tags, sheets or cards are properly controlled. 
B)  the client's personnel are complying with the instructions for inventory counts. 
C)  items belonging to the client are accurately counted and recorded. 
D)  all of the above.

Which of the following substantive tests of cash account balances are always performed?

The rights and obligations assertion for inventory relates to which of the following audit objectives?

Can you help Rosa Chaput determine why there is some effort put into testing cash when the cash account is not material?

The timing of substantive testing is dependent on the risk assessment of the significant account in question.

Which are the two audit assertions considered most important to the auditor concluding there are no material misstatements in trade receivables at year-end?

Ensuring that all property, plant and equipment owned by the entity at year-end are included on the balance sheet relates to which assertion?

Prepayments are audited by vouching the balance to the supporting invoices.

Anna Monticello tested the postings of the totals in the cash receipts journal to the general ledger, trade receivables sub-ledger and other subsidiary ledgers. Which assertion(s) was she Fulfilling?

Ensuring that accounts payable are stated at the amounts owed at year-end relates to the rights and obligations assertion.

Miriam Bakeman recently performed procedures to evaluate whether client's internal control system is preventing or detecting a material misstatement. This is an example of

George Malinowski was trying to check whether the receivables of Cosentino Distributors were being carried at their net realizable value. His objective was to fulfill which assertion?

The key objective when performing substantive procedures is to determine whether there are material misstatements within an account balance.

The three audit assertions particularly important to enable the auditor to conclude that there are no material misstatements in cash as at year-end are:

Investments can be vouched to supporting external documentation such as:

Accounting for the numerical sequence of cheques issued during a specific period is a substantive test relating to the purchases process.

Priscille White was performing the review of cash transactions at Banker's Trust. Which three assertions are the most important when ensuring that there are no material misstatements For cash at Banker's Trust?

Testing the mathematical accuracy of the cash disbursement journal relates to the existence assertion.

The valuation and allocation assertion relates to which of the following audit objectives?

Which of the following statements is incorrect?

Observing the client's inventory taking enables the auditor to establish that:

Introduction and Overview of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Audit Planning I

Audit Planning II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Gaining an Understanding of the Clients System of Internal Controls

Execution of the Audittesting of Controls

Execution of the Auditperforming Substantive Procedures

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

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Exam 10: Substantive Testing and Balance Sheet Accounts

Which of the following substantive tests of cash account balances are always performed?

The rights and obligations assertion for inventory relates to which of the following audit objectives?

Can you help Rosa Chaput determine why there is some effort put into testing cash when the cash account is not material?

The timing of substantive testing is dependent on the risk assessment of the significant account in question.

Which are the two audit assertions considered most important to the auditor concluding there are no material misstatements in trade receivables at year-end?

Ensuring that all property, plant and equipment owned by the entity at year-end are included on the balance sheet relates to which assertion?

Prepayments are audited by vouching the balance to the supporting invoices.

Anna Monticello tested the postings of the totals in the cash receipts journal to the general ledger, trade receivables sub-ledger and other subsidiary ledgers. Which assertion(s) was she Fulfilling?

Ensuring that accounts payable are stated at the amounts owed at year-end relates to the rights and obligations assertion.

Miriam Bakeman recently performed procedures to evaluate whether client's internal control system is preventing or detecting a material misstatement. This is an example of

George Malinowski was trying to check whether the receivables of Cosentino Distributors were being carried at their net realizable value. His objective was to fulfill which assertion?

The key objective when performing substantive procedures is to determine whether there are material misstatements within an account balance.

The three audit assertions particularly important to enable the auditor to conclude that there are no material misstatements in cash as at year-end are:

Investments can be vouched to supporting external documentation such as:

Accounting for the numerical sequence of cheques issued during a specific period is a substantive test relating to the purchases process.

Priscille White was performing the review of cash transactions at Banker's Trust. Which three assertions are the most important when ensuring that there are no material misstatements For cash at Banker's Trust?

Testing the mathematical accuracy of the cash disbursement journal relates to the existence assertion.

The valuation and allocation assertion relates to which of the following audit objectives?

Which of the following statements is incorrect?

Observing the client's inventory taking enables the auditor to establish that:

Introduction and Overview of Audit and Assurance

Ethics, Legal Liability and Client Acceptance

Audit Planning I

Audit Planning II

Audit Evidence

Sampling and Overview of the Risk Response Phase of the Audit

Gaining an Understanding of the Clients System of Internal Controls

Execution of the Audittesting of Controls

Execution of the Auditperforming Substantive Procedures

Substantive Testing and Income Statement Accounts

Completing and Reporting on the Audit

Filters