Month: October 2025

Which ONE of the following describes a manifestation of the expectations gap?

Select ONE answer:

1. Users are not blaming the auditors for a fraud discovered in a company after an audit
2. Users are discovering that the directors refuse to cooperate in providing the auditor with the evidence he requests
3. Shareholders approve the appointment of the auditor at an annual general meeting
4. Users rely on the audited financial statements as a fair valuation of the company

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 => Users should not just rely on the audited financial statements as a fair valuation of the company and must do other due diligence activities, such as looking at forward-looking cash flows.

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

Which ONE of the following describes a manifestation of the expectations gap?

Select ONE answer:

1. Users are discovering that the directors refuse to cooperate in providing the auditor with the evidence he requests
2. Shareholders approve the appointment of the auditor at an annual general meeting
3. Users are blaming the auditors for a fraud discovered in a company after an audit has taken place
4. Users do not just rely on the audited financial statements as a fair valuation of the company

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 => The responsibility for preventing fraud primarily lies with company management, including the CEO and CFO, who must ensure accurate financial reporting and establish strong internal controls. Additionally, the Board of Directors and the Audit Committee play crucial roles in overseeing management and ensuring an ethical corporate culture.
4. Not correct

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

Which ONE of the following statements is invalid?

Select ONE answer:

1. Positive (reasonable) assurance will be given on a statutory audit assignment
2. Positive (reasonable) assurance will be given on a review assignment
3. Positive (reasonable) assurance requires more rigorous work to be undertaken than negative assurance does
4. Negative assurance is assurance given in the absence of any indications to the contrary

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 =>   is incorrect as positive (or reasonable) assurance will be given on an audit assignment, whereas negative (or limited) assurance is given on a review assignment, reflecting the limited procedures carried out.
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 not an assertion used by the auditor about different classes of transactions?

Select ONE answer:

1. Rights and Obligations
2. Occurrence
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 1

1. Correct => Rights and Obligations would be used in respect of a balance, not a class of transactions.
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 not an assertion used by the auditor about different classes of transactions?

Select ONE answer:

1. Occurrence
2. Completeness
3. Cut-off
4. Existence

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 => existence would be used in respect of a balance, not a class of transactions.

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