TEST BANK For Auditing & Assurance Services: A
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ll Systematic Approach, 12th Edition
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Chapters 1 - 21 Complete
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,Chapter 1: An Introduction to Assurance and Financial Statement Auditing
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Chapter 2: The Financial Statement Auditing Environment
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Chapter 3: Audit Planning, Types of Audit Tests, and Materiality
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Chapter 4: Risk Assessment
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Chapter 5: Evidence and Documentation
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Chapter 6: Internal Control in a Financial Statement Audit
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Chapter 7: Auditing Internal Control over Financial Reporting
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Chapter 8: Audit Sampling: An Overview and Application to Tests of Controls
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Chapter 9: Audit Sampling: An Application to Substantive Tests of Account Balances
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Chapter 10: Auditing the Revenue Process
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Chapter 11: Auditing the Purchasing Process
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Chapter 12: Auditing the Human Resource Management Process
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Chapter 13: Auditing the Inventory Management Process
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Chapter 14: Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets, and
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Property, Plant, and Equipment
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Chapter 15: Auditing the Financing/Investing Process: Long-Term Liabilities, Stockholders’ Equity,
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and Income Statement Accounts
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Chapter 16: Auditing the Financing/Investing Process: Cash and Investments
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Chapter 17: Completing the Audit Engagement
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Chapter 18: Reports on Audited Financial Statements
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Chapter 19: Professional Conduct, Independence, and Quality Management
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Chapter 20: Legal Liability
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Chapter 21: Assurance, Attestation, and Internal Auditing Services
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,Auditing & Assurance Services: A Systematic Approach, 12e (Messier) Chapter 1
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lAn Introduction to Assurance and Financial Statement Auditing
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1) Auditing focuses on rules, techniques, and computations required to prepare and analyze
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financial information.
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ANSWER: FALSE l l
Difficulty:1Easy
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Topic: The Importance for Studying Auditing
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Learning Objective: 01-01 Understand why studying auditing can be valuable to you whether or
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not you plan to become an auditor, and why it is different from studying accounting.
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Bloom's: Remember l l
AACSB: Communication
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AICPA: BB Legal; FN Decision Making
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2) Decision makers demand reliable information that is provided by accountants.
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ANSWER: TRUE l l
Difficulty:1Easy
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Topic: The Demand for Auditing and Assurance
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Learning Objective: 01-02 Understand the demand for auditing and be able to explain the
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desired characteristics of auditors and audit services through an analogy to a house inspector and
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a house inspection service.
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Bloom's: Understand l l
AACSB: Communication
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AICPA: FN Decision Making; BB Industry
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3) Information asymmetry seldom occurs. ll ll ll
ANSWER: FALSE l l
Difficulty:2Medium
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Topic: The Demand for Auditing and Assurance
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Learning Objective: 01-02 Understand the demand for auditing and be able to explain the
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desired characteristics of auditors and audit services through an analogy to a house inspector and
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a house inspection service.
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Bloom's: Apply l l
AACSB: Communication l l
AICPA: BB Industry; FN Reporting
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, 4) Conflicts of interest often occur between absentee owners and managers.
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ANSWER: TRUE l l
Difficulty:2Medium
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Topic: The Demand for Auditing and Assurance
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Learning Objective: 01-02 Understand the demand for auditing and be able to explain the
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desired characteristics of auditors and audit services through an analogy to a house inspector and
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a house inspection service.
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Bloom's: Apply l l
AACSB: Communication l l
AICPA: BB Industry; FN Reporting
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5) Auditing services and attestation services are the same. ll ll ll ll ll ll ll
ANSWER: FALSE l l
Difficulty:1Easy
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Topic: Auditing, Attest, and Assurance Services Defined
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Learning Objective: 01-03 Understand the relationships among auditing, attestation, and
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assurance services.
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Bloom's: Understand l l
AACSB: Communication
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AICPA: BB Industry; FN Reporting
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6) Auditing is a type of attest service. ll ll ll ll ll ll
ANSWER: TRUE l l
Difficulty:1Easy
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Topic: Auditing, Attest, and Assurance Services Defined
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Learning Objective: 01-03 Understand the relationships among auditing, attestation, and
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assurance services.; 01-04 Know the basic definition of a financial statement audit.
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Bloom's: Understand l l
AACSB: Communication
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AICPA: BB Industry; FN Reporting
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7) Testing all transactions that occurred during the period is cost prohibitive.
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ANSWER: TRUE l l
Difficulty: 2 Medium
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Topic: The Audit Process
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Learning Objective: 01-06 Be able to explain why on most audit engagements an auditor tests
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only a sample of transactions that occurred.
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Bloom's: Apply l l
AACSB: Communication l l
AICPA: FN Decision Making; BB Critical Thinking
l l ll ll ll ll ll
ll ll ll ll ll ll ll
ll Systematic Approach, 12th Edition
ll ll ll ll
Chapters 1 - 21 Complete
ll ll ll ll
,Chapter 1: An Introduction to Assurance and Financial Statement Auditing
ll ll ll ll ll ll ll ll ll
Chapter 2: The Financial Statement Auditing Environment
ll ll ll ll ll ll
Chapter 3: Audit Planning, Types of Audit Tests, and Materiality
ll ll ll ll ll ll ll ll ll
Chapter 4: Risk Assessment
ll ll ll
Chapter 5: Evidence and Documentation
ll ll ll ll
Chapter 6: Internal Control in a Financial Statement Audit
ll ll ll ll ll ll ll ll
Chapter 7: Auditing Internal Control over Financial Reporting
ll ll ll ll ll ll ll
Chapter 8: Audit Sampling: An Overview and Application to Tests of Controls
ll ll ll ll ll ll ll ll ll ll ll
Chapter 9: Audit Sampling: An Application to Substantive Tests of Account Balances
ll ll ll ll ll ll ll ll ll ll ll
Chapter 10: Auditing the Revenue Process
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Chapter 11: Auditing the Purchasing Process
ll ll ll ll ll
Chapter 12: Auditing the Human Resource Management Process
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Chapter 13: Auditing the Inventory Management Process
ll ll ll ll ll ll
Chapter 14: Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets, and
ll ll ll ll ll ll ll ll ll ll
Property, Plant, and Equipment
ll ll ll ll
Chapter 15: Auditing the Financing/Investing Process: Long-Term Liabilities, Stockholders’ Equity,
ll ll ll ll ll ll ll ll ll
and Income Statement Accounts
ll ll ll ll
Chapter 16: Auditing the Financing/Investing Process: Cash and Investments
ll ll ll ll ll ll ll ll
Chapter 17: Completing the Audit Engagement
ll ll ll ll ll
Chapter 18: Reports on Audited Financial Statements
ll ll ll ll ll ll
Chapter 19: Professional Conduct, Independence, and Quality Management
ll ll ll ll ll ll ll
Chapter 20: Legal Liability
ll ll ll
Chapter 21: Assurance, Attestation, and Internal Auditing Services
ll ll ll ll ll ll ll
,Auditing & Assurance Services: A Systematic Approach, 12e (Messier) Chapter 1
ll ll ll ll ll ll ll ll ll ll
lAn Introduction to Assurance and Financial Statement Auditing
l ll ll ll ll ll ll ll
1) Auditing focuses on rules, techniques, and computations required to prepare and analyze
ll ll ll ll ll ll ll ll ll ll ll
financial information.
ll ll
ANSWER: FALSE l l
Difficulty:1Easy
ll l l
Topic: The Importance for Studying Auditing
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Learning Objective: 01-01 Understand why studying auditing can be valuable to you whether or
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not you plan to become an auditor, and why it is different from studying accounting.
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
Bloom's: Remember l l
AACSB: Communication
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AICPA: BB Legal; FN Decision Making
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2) Decision makers demand reliable information that is provided by accountants.
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ANSWER: TRUE l l
Difficulty:1Easy
ll l l
Topic: The Demand for Auditing and Assurance
l l ll ll ll ll ll
Learning Objective: 01-02 Understand the demand for auditing and be able to explain the
ll l l ll ll ll ll ll ll ll ll ll ll ll
desired characteristics of auditors and audit services through an analogy to a house inspector and
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
a house inspection service.
ll ll ll ll
Bloom's: Understand l l
AACSB: Communication
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AICPA: FN Decision Making; BB Industry
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3) Information asymmetry seldom occurs. ll ll ll
ANSWER: FALSE l l
Difficulty:2Medium
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Topic: The Demand for Auditing and Assurance
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Learning Objective: 01-02 Understand the demand for auditing and be able to explain the
ll l l ll ll ll ll ll ll ll ll ll ll ll
desired characteristics of auditors and audit services through an analogy to a house inspector and
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
a house inspection service.
ll ll ll ll
Bloom's: Apply l l
AACSB: Communication l l
AICPA: BB Industry; FN Reporting
l l ll ll ll
, 4) Conflicts of interest often occur between absentee owners and managers.
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ANSWER: TRUE l l
Difficulty:2Medium
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Topic: The Demand for Auditing and Assurance
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Learning Objective: 01-02 Understand the demand for auditing and be able to explain the
ll l l ll ll ll ll ll ll ll ll ll ll ll
desired characteristics of auditors and audit services through an analogy to a house inspector and
ll ll ll ll ll ll ll ll ll ll ll ll ll ll ll
a house inspection service.
ll ll ll ll
Bloom's: Apply l l
AACSB: Communication l l
AICPA: BB Industry; FN Reporting
l l ll ll ll
5) Auditing services and attestation services are the same. ll ll ll ll ll ll ll
ANSWER: FALSE l l
Difficulty:1Easy
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Topic: Auditing, Attest, and Assurance Services Defined
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Learning Objective: 01-03 Understand the relationships among auditing, attestation, and
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assurance services.
ll ll
Bloom's: Understand l l
AACSB: Communication
ll ll
AICPA: BB Industry; FN Reporting
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6) Auditing is a type of attest service. ll ll ll ll ll ll
ANSWER: TRUE l l
Difficulty:1Easy
ll l l
Topic: Auditing, Attest, and Assurance Services Defined
l l ll ll ll ll ll
Learning Objective: 01-03 Understand the relationships among auditing, attestation, and
ll l l ll ll ll ll ll ll ll
assurance services.; 01-04 Know the basic definition of a financial statement audit.
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Bloom's: Understand l l
AACSB: Communication
ll ll
AICPA: BB Industry; FN Reporting
l l ll ll ll
7) Testing all transactions that occurred during the period is cost prohibitive.
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ANSWER: TRUE l l
Difficulty: 2 Medium
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Topic: The Audit Process
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Learning Objective: 01-06 Be able to explain why on most audit engagements an auditor tests
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only a sample of transactions that occurred.
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Bloom's: Apply l l
AACSB: Communication l l
AICPA: FN Decision Making; BB Critical Thinking
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