The Multiple Choice Questions Blog

Which ONE of the following does NOT provide evidence to support the rights and obligations assertion in relation to non-current assets?

Select ONE answer:

1. Title deeds
2. Sales invoices
3. Purchase invoices
4. Vehicle registration documents

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – The rights and obligations assertion means that the entity holds or controls the rights to assets. Although vehicle registration documents show registered keeper, not owner, the keeper is likely to have control of the asset. Both title deeds and purchase invoices give evidence of ownership (which gives control). Sales invoices provide evidence of no longer owning something and therefore do not support the assertion of rights and obligations.
3. Not correct
4. Not correct

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Which ONE of the following is a purpose of a written representation letter?

Select ONE answer:

1. Acknowledgement that management has fulfilled its responsibility for the preparation of the financial statements
2. Provision of evidence in respect of material items where other evidence is available
3. Confirmation by management of the scope of the work to be carried out by the assurance Firm
4. Provision of details of proposed modifications to the auditor’s report

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

1. Correct – The written representation letter serves two purposes from the list provided: (1) acknowledging that management has fulfilled its responsibility for preparing the financial statements, and (2) confirming management’s belief that the aggregate of uncorrected misstatements is immaterial to the financial statements. Where other evidence is available on a matter, the written representation letter does not provide audit evidence. Management’s confirmation of the scope of work to be performed is included in the engagement letter.
2. Not correct
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

Which ONE of the following is a purpose of a written representation letter?

Select ONE answer:

1. Provision of evidence in respect of material items where other evidence is available
2. Confirmation by management of the scope of the work to be carried out by the assurance Firm
3. Provision of details of proposed modifications to the auditor’s report
4. Acknowledgement by management of its belief that the aggregate of uncorrected misstatements is immaterial to the financial statements

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 4

1. Not correct
2. Not correct
3. Not correct
4. Correct – The two purposes of the written representation letter are: (1) acknowledgment that management has fulfilled its responsibility for preparing the financial statements, and (2) acknowledgment by management that it believes the aggregate of uncorrected misstatements is immaterial to the financial statements. Where other evidence is available on a matter, the written representation letter does not serve as audit evidence. Management’s confirmation of the scope of work to be carried out is included in the engagement letter.

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For the following statement concerning written representations letters, select whether it is of no relevance, depends on the type of business, true or false.

Written representations can be used as a substitute for evidence which would be available to the auditor by other means.

Select ONE answer:

1. True
2. No relevance
3. False
4. Depends on the type of business

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 3

1. Not correct
2. Not correct
3. Correct – Written representations cannot be used as a substitute for other evidence that is expected to be available.
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.

For the following statement concerning written representations letters, select whether it is of no relevance, depends on the type of business, true or false.

• The matters to be referred to in the written representation letter shall be discussed by the auditor with senior management.

Select ONE answer:

1. False
2. True
3. No relevance
4. Depends on the type of business

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

1. Not correct
2. Correct – It is usually only of senior management that auditors request written representations as they are responsible for matters of judgement, cooperating with the auditors etc.
3. Not correct
4. Not correct

This work is licensed under a Creative Commons Attribution 4.0 International License.