Auditing Quiz

The level of assurance provided by an audit of detecting a material misstatement is referred to as:

• Absolute assurance.

• High assurance.

• Negative assurance.

• Reasonable assurance.

The difference between what the public expects to get from the audited financial statements and what the public is actually getting is known as:

• Credibility gap

• Audit gap

• Expectation gap

• Level of assurance gap

Which of the following is responsible for an entity's financial statements?

• The entity's management.

• The entity's audit committee.

• The entity's internal auditors.

• The entity's board of directors.

Which management assertion is being tested when the auditor traces receiving reports to the purchases journal to ensure all received goods are recorded?

• Existence

• Rights and obligations

• Completeness

• Accuracy

An auditor inspects documents whether the client has appropriate title over its reported inventories. This procedure primarily tests which assertion?

• Valuation

• Rights and obligations

• Existence

• Completeness

Which of the following is not one of the PSA's recognized management assertions for account balances?

• Completeness

• Existence

• Accuracy, valuation, and allocation

• Understandability

An auditor tests whether recorded sales transactions are valid by matching invoices to shipping documents. Which assertion is being tested?

• Cutoff

• Occurrence

• Accuracy

• Presentation

The objective of an audit of the financial statements is an expression of an opinion on

• the fairness of the financial statements in all material respects.

• the accuracy of the financial statements.

• the fairness of the financial statements and the effectiveness of the client's internal controls

• the effectiveness of the client's operations.

Which of the following is not one of the steps used to develop audit objectives?

• know the proper type of audit opinion to issue

• divide the financial statements into cycles

• know management assertions about the financial statements

• know the specific audit objectives for classes of transactions

The following officers certify the accuracy of the financial statements, except

• The president of the company

• Chief financial officer

• Chairman of the board

• The external audit partner