1. Statement 1: In the audit of liabilities, the objective of the auditor is the same regardless of classification. Statement 2: The material omission or misstatement will affect the fairness of the financial statement and will affect the completeness assertion in audit of liabilities.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

2. Statement 1: When the auditor conduct reconciliation of subsidiary ledger and general ledger of liabilities, the primary purpose of his/her audit is to check the completeness and valuation of liabilities. Statement 2: In checking the cut-off of accounts payable, the auditor shall review cut-offs in related areas such as purchase and inventories, paying particular attention to goods in transit.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

3. Statement 1: Because of the evolving complex nature of accounting standards for high-levels financing transactions, auditors need to be alert when auditing such situation. Statement 2: Because of the evolving complex nature of accounting standards for high-levels financing transactions, auditors shall obtain evidences about related accounts such as finance lease, interest expense, interest payable, premium and discount on bond amortization.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

4. Statement 1: Liabilities and related accounts are properly classified, described and disclosed in the financial statements including notes, in accordance with the applicable PFRS comply the presentation and disclosure assertion in auditing liabilities. Statement 2: All recorded liabilities on the Statement of Financial Position are authentic debts due to creditors of the entity comply the existence assertion in auditing liabilities.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

5. Statement 1: Undisclosed liabilities are commitments, guarantees and other potential obligations not recorded on the Statement of Financial Position. Statement 2: Assertion for rights and obligations is satisfied when liabilities reported in Statement of Financial Position represents obligations of the entity at the reporting date.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

6. Statement 1: When planning audit of property, plant and equipment (PPE), the auditor shall consider that the amounts for that PPE is material to the Statement of Financial Position and expect that the account balances do not necessarily change significantly from year to year. Statement 2: The auditor normally assesses control risk at a maximum level and performs extensive substantive tests which emphasize the review of significant additions and disposal, and analytical procedure to test the provisions for depreciation and depletion.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

7. Statement 1: In audit of PPE, the auditor shall obtain evidences about related accounts of depreciation expense, impairment loss (if any), lease (rent) expense, and repairs and maintenance expense. Statement 2: PPE is carried at appropriate amount taking into account the requirements of PAS 16-PPE and PAS 36-Impairment of Assets.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

8. Statement 1: In completeness assertion, all PPE owned and leased under finance lease by the entity at the reporting date are included in the Statement of Financial Position. Statement 2: In existence assertion, all recoded PPE in the Statement of Financial Position (including asset leased under finance lease) exist.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

9. Statement 1: In auditing PPE, liens, pledges, security and restrictions to PPE must be identified and properly disclosed. Statement 2: The objective of an auditor in audit of PPE includes checking that the entity owns, or has legal right to all PPE reported on the Statement of Financial Position at the reporting date.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

10. Statement 1: In examination of any addition and disposal of PPE, the main audit objectives is to comply with existence/occurrence and valuations and rights assertions. Statement 2: In examination of any addition and disposal of PPE, the auditor shall review the capital expenditure authorization, purchase agreement, contract deeds, cancelled checks and other important documentation in acquisition or disposal of PPE.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

11. Statement 1: When auditor is auditing the treasury shares of his/her client, he/she shall inspect the securities on hand and examine if it is under the name of the corporation. Statement 2: When auditor is auditing the treasury shares of his/her client, he/she shall determine whether the reacquisition or reissuance was authorized by the board of directors.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

12. Statement 1: The auditor shall review and examine the Articles of Incorporation, By-laws, and contract agreements of his/her clients while auditing shareholder's equity. Statement 2: The auditor usually perform substantive tests on the changes in the owner's equity accounts such as new stock issues, treasury shares, prior period adjustments, dividend payments and declarations.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

13. Statement 1: In checking the valuation assertion for audit of shareholder's equity, the auditors shall check that the equity accounts stated in the Statement of Financial Positions are at its appropriate amounts. Statement 2: In checking the completeness assertion for audit of shareholder's equity, the auditors shall check that all equity interests that should have been recorded have been recorded and included in the Statement of Financial Positions.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

14. Statement 1: In audit of shareholder's equity, the auditors analyze retained earnings and review appropriateness of dividends.

Statement 2: In audit of shareholder's equity, the auditors obtain and verify equity reconciliation schedule.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

15. Statement 1: In obtaining equity reconciliation schedule, the auditor shall test movements from prior yearend to current yearend to verify proper accounting for changes in equity. Statement 2: In obtaining equity reconciliation schedule, the auditor shall check if amounts are agreed in the general ledger accounts.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

16. Statement 1: In auditor's analysis of amortization, he/she shall exclude goodwill and intangible assets with indefinite life since these assets are subjected to impairment but not amortization. Statement 2: To test the reasonableness of amortization, the auditor shall review the amortization policies set forth in the company manuals and determine if they are applied consistently.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

17. Statement 1: Impairment loss should be provided if the carrying amount of an asset is greater than its recoverable amount. Statement 2: An entity should review assets for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

18. Statement 1: In considering the existence assertion in audit of intangibles, all recorded identifiable intangible assets exist and will benefit the future period. Statement 2: In considering the completeness assertion in audit of intangibles, all intangibles owned by the entity are included in the Statement of Financial Position.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

19. Statement 1: In considering the rights and obligation assertion in audit of intangibles, intangibles should be free from liens, pledges or security interests are identified and properly disclosed. Statement 2: In analyzing and examining evidence of valuation of intangibles, the auditors shall test the bases on which the additions, amortization, impairments and disposals are recorded.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.

20. Statement 1: In determining the original cost of intangible, if prior year client, refer to the permanent file/working paper. Statement 2: In determining the original cost of intangible, if new client, refer to the last year's audited financial statement or prior year working paper of the predecessor auditor.

a. Statement 1 is correct. b. Statement 2 is correct. c. Both statements are correct. d. Both statements are incorrect.