Question

1. the assertions occurrence and existence involves:

a. Following accounting standards

b. Ownership

c. Overstatement

d. Understatement

2. Management states "that all recorded sales took place" relates to which management assertion?

a. Completeness

b. Occurrence

c. Rights and Obligations

d. Accuracy, valuation and allocation

3. as a test of sales for completeness, an auditor selects 50 sales recorded in the sales journal and vouches them to sales invoices and then to the respective shipping document. This evidence is not appropriate because of the violation of:

a. Auditor's direct knowledge

b. Objectivity

c. Reliability

d. Relevance

Answer 1

1. Option (b) is correct

Occurrence & existence assertion means that the transaction actually occurred and the asset actually exists and owned by the company.So it involves ownership.

2. Option (b) is correct

Occurrence assertion states that the transaction actually took place. All recorded sales took place is an example of occurrence assertion.

3. Option (d) is correct

In a test of completeness, the procedure in Relevance should start from documents to invoices and then to sales journals, but here auditor starts from sales journal to invoices to documents. So, it is a violation of Relevance.