Audit Objectives and Management Assertions

If a short-term note payable is included in the accounts payable balance on the financial statement, there is a violation of the:

• A. completeness assertion

• B. existence assertion

• C. cutoff assertion

• D. classification and understandability assertion

Which of the following statements is true?

• A. Audit objectives follow and are closely related to management assertions.

• B. Management’s assertions follow and are closely related to the audit objectives.

• C. The auditor’s primary responsibility is to find and disclose fraudulent management assertions.

• D. Assertions about presentation and disclosure deal with whether the accounts have been included in the financial statements at appropriate amounts.

Management assertions are:

• A. implied or expressed representations about accounts, transactions, and disclosures in the financial statements.

• B. stated in the footnotes to the financial statements.

• C. explicitly expressed representations about the financial statements.

• D. provided to the auditor in the assertions letter, but are not disclosed on the financial statements.

The occurrence assertion applies to _______.

• A. presentation and disclosure matters

• B. classes of transactions and events during the period

• C. account balances

• D. proper classification of income statement accounts

Which of the following management assertions is not associated with transaction-related audit objectives?

• A. Occurrence

• B. Classification and understandability

• C. Accuracy

• D. Completeness

The detail tie-in is part of the_______ assertion for account balances.

After general audit objectives are understood, specific audit objectives for each account balance on the financial statements can be developed. Which of the following statements is true?

• A. There should be at least one specific objective for each relevant general objective.

• B. There will be only one specific objective for each relevant general objective.

• C. There will be many specific objectives developed for each relevant general objective.

• D. There must be one specific objective for each general objective.

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?

• A. The entity has rights to the inventory.

• B. Inventory is properly valued.

• C. Inventory is properly presented in the financial statements.

• D. Inventory is complete.

Inquiries of warehouse personnel concerning possible obsolete or slow moving inventory items provide assurance about the PCAOB assertion of_________.

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

• A. Transactions and events that have been recorded have occurred and pertain to the entity.

• B. Transactions and events have been recorded in the proper accounts.

• C. The entity holds or controls the rights to assets, and liabilities are obligations of the entity.

• D. Amounts and other data related to the transactions and events have been recorded appropriately.