Month: October 2025

The two types of procedures used in gathering evidence are A – tests of controls and B – substantive procedures.

For each of the three examples below, select the type of procedure being illustrated: A – tests of controls or B – substantive procedures.

Example 1 – Observation of opening the post
Example 2 – Calculation of the gross profit margin and comparison with that of the previous accounting period
Example 3 – Reviewing invoices paid for evidence of authorisation

Select ONE answer:

1. Example 1. B and Example 2. B and Example 3. A
2. Example 1. A and Example 2. B and Example 3. A
3. Example 1. A and Example 2. A and Example 3. B
4. Example 1. B and Example 2. A and Example 3. B

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 => Observing the opening of the post is a test of control as it is the observation of a control taking place. Calculation of the gross profit margin and comparison with that of the previous accounting period is an analytical procedure (which is, in turn, a substantive procedure). Reviewing for authorisation is also testing that a control has been applied.
3. Not correct
4. Not correct

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For each of the following statements, select whether they are true or false with respect to the concept of substantive procedures.

Statement 1 – The auditor must carry out substantive procedures on all material items.

Statement 2 – The auditor only carries out substantive procedures if the results of tests of controls are inconclusive.

Statement 3 – Substantive procedures include both analytical procedures and tests of details.

Identify whether the statements made above are true or false?

Select ONE answer:

1. Statement 1. True and Statement 2. False and Statement 3. True
2. Statement 1. False and Statement 2. False and Statement 3. True
3. Statement 1. True and Statement 2. True and Statement 3. False
4. Statement 1. False and Statement 2. True and Statement 3. True

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 => Statement 1 is True as material items must be tested with substantive procedures. However, the extent of these procedures will depend on whether reliance can be placed on the related internal controls.
2. Not correct
3. Not correct
4. Not correct

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Which ONE of the following is not an assertion used by the auditor about account balances at the period end?

Select ONE answer:

1. Existence
2. Accuracy, valuation and allocation
3. Completeness
4. Cut-Off

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 – is incorrect because cut-off relates to classes of transactions (ISA (UK) 315)

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

The following options are types of tests that might be carried out by an assurance provider.

For the example given, select the financial statement assertion that is being tested.

• Tracing non-current assets which have been observed in use back to the non-current asset register

Select ONE answer:

1. Existence
2. Classification
3. Completeness
4. Tests of controls only

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 – Tracing non-current assets back to the non-current asset register ensures that this balance is recorded accurately.
4. Not correct

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

The following options are types of tests that might be carried out by an assurance provider.

For the example given, select the financial statement assertion that is being tested.

– Review of the financial statements using a Companies Act checklist

Select ONE answer:

1. Existence
2. Classification
3. Completeness
4. Tests of controls only

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 Companies Act checklist ensures that all classification issues are addressed.
3. Not correct
4. Not correct

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