18 Questions
Which audit procedure is typically used for examining records or documents and is considered one of the most reliable sources of audit evidence?
Inspection
Why are tests of controls necessary in an audit?
To evaluate the operating effectiveness of internal controls.
In auditing, which assertion focuses on the accuracy and valuation of account balances at the end of a reporting period?
Valuation and allocation
Which audit procedure is commonly used throughout the audit process and complements other procedures?
Inquiry
When are tests of controls necessary during an audit?
When the auditor expects controls to be effectively preventing misstatements.
Which audit procedure involves the physical examination of assets to provide reliable evidence about their existence and the entity's rights and obligations?
Inspection
What does the assertion about classes of transactions and events relate to?
Transactions and events recorded have occurred and pertain to the entity.
Which assertion relates to the appropriate inclusion of all assets, liabilities, and equity interests in the financial statements?
Completeness
Which of the following is NOT part of the accuracy and valuation assertions about presentation and disclosure?
Disclosed events, transactions, and other matters have occurred and pertain to the entity.
Which step is involved in the auditor obtaining audit evidence to draw reasonable conclusions on which to base the audit opinion?
Obtaining an understanding of the entity and its environment, including its internal control, to assess the risks of material misstatement.
What is the purpose of the valuation and allocation assertion about account balances at period end?
To ensure that assets, liabilities, and equity interests are included in the financial statements at appropriate amounts.
What does the rights and obligations assertion about account balances at period end relate to?
Ensuring that the entity has rights and obligations related to the recorded assets and liabilities.
Which type of audit evidence is considered the most reliable?
Audit evidence obtained directly by the auditor
Which statement regarding audit evidence is incorrect?
The matter of difficulty or expense involved is a valid basis for omitting an audit procedure for which there is no alternative.
Which of the following assertions about classes of transactions and events is least likely to be used by the auditor?
Presentation
Which category of assertions does the auditor use to assess risks of material misstatement?
All of the above
Which assertion about account balances at the period end is most important for the auditor to consider?
Existence
Which assertion about classes of transactions and events is the auditor least likely to focus on?
Presentation
Test your knowledge on audit assertions related to account balances at period end. Evaluate the inclusion of assets, liabilities, and equity in financial statements. Check your understanding of ensuring completeness, accuracy, and relevance of recorded transactions.
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