Month: October 2025

Which ONE of the following is a valid comment about the quality of assurance evidence?

Select ONE answer:

1. Evidence from internal sources is more reliable than evidence created by the assurance provider
2. Evidence from internal sources is less reliable when related internal controls operate effectively
3. Evidence from external sources is more reliable than evidence obtained from the entity’s records
4. Photocopies are more reliable than facsimiles

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 => Third-party confirmation of an accounting transaction, such as a bank statement, is always something that is sought during the audit process, i.e. a bank reconciliation.
4. Not correct

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

Which ONE of the following is a valid comment about the quality of assurance evidence?

Select ONE answer:

1. Evidence from internal sources is more reliable than evidence created by the assurance provider
2. Evidence from internal sources is more reliable when related internal controls operate effectively
3. Evidence from external sources is less reliable than evidence obtained from the entity’s records
4. Photocopies are more reliable than facsimiles

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 => If internal controls are not operating effectively, then evidence from reliable sources is not to be relied upon.
3. Not correct
4. Not correct

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

Which ONE of the following procedures could not be used by assurance providers to provide evidence relating to a balance in the financial statements?

Select ONE answer:

1. Walk-through procedure
2. Test of control
3. Test of detail
4. Analytical procedure

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 => A walk-through procedure does not provide evidence relating to a specific balance on the financial statements, but is used instead to ensure that the systems operate as the assurance provider believes that they do.
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 are true in respect of related party transactions?

Select ONE answer:

1. Related party transactions do not always need to be disclosed in the financial statements
2. Related party transactions tend to be low-risk to the auditor
3. Related party transactions disclosure is unlikely to be material to the financial statements
4. Related party transactions will probably pose a significant control risk in relation to the entity

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 correct, because it is commonly the case that management has not put in place reliable internal controls to identify related party transactions.

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

Which ONE of the following are true in respect of related party transactions?

Select ONE answer:

1. Related party transactions must be completely disclosed in the financial statements
2. Related party transactions tend to be low-risk to the auditor
3. Related party transactions disclosure is unlikely to be material to the financial statements
4. Related party transactions will probably pose an insignificant control risk in relation to the entity

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 => Disclosure should be complete.
2. Not correct
3. Not correct
4. Not correct

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