[Test Bank] Auditing And Assurance Services, 16Th Edition By Arens, Elder, Beasley, Hogan

[TEST BANK]
AUDITING AND
ASSURANCE
SERVICES, 16TH
EDITION BY
ARENS, ELDER,
BEASLEY, HOGAN

,Auditing and Assurance Services, (Arens)
Chapter 1 The Demand for Audit and Other Assurance Services
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Learning Objective 1-1 bg bg




1) The Sarbanes-Oxley Act applies to which of the following companies?
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A) All companies bg




B) Privately held companies bg bg




C) Public companies bg




D) All public companies and privately held companies with assets greater than $500 million An
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swer: C b g




Terms: Sarbanes- b g




Oxley Act Diff: Easy bg bg b g




Objective: LO 1-1 b g bg




AACSB: Reflective thinking skills To b g bg bg bg




pic: SOX b g




2) Which of the following is considered audit evidence? A
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)
Oral statements ma Written Comm
bg Auditor Obser bg bg bg




de bymanagement
bg bg unications vation
Y N N

B)
Oral statements ma bg bg Written Comm bg Auditor Obser bg




de bymanagement
bg bg unications vation
N Y Y

C)
Oral statements ma bg bg Written Comm bg Auditor Obser bg




de bymanagement
bg bg unications vation
Y Y Y

D)
Oral statements ma bg bg Written Comm bg Auditor Obser bg




de bymanagement
bg bg unications vation
N N Y

Answer: C b g




Terms: Audit evidence D b g bg bg




iff: Moderate Objective:
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gLO 1-1 bg




AACSB: Reflective thinking skills b g bg bg




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,3) Evidence is paramount to audit and attestation engagements. List the four basic types of audit evi
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dence.
Answer: The four types of audit and attestation evidence include:
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1. Electronic and documentary data about transactions bg bg bg bg bg




2. Written and electronic communications with outsiders
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3. Observations by the auditor bg bg bg




4. Oral testimony of the auditee (client)
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Terms: Basic types of audit evidence D
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iff: Easy
b g




Objective: LO 1-1 b g bg




AACSB: Reflective thinking skills b g bg bg




4) The criteria by which an auditor evaluates the information under audit may vary with the inf
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ormation being audited. bg bg




A) True
B) False A bg




nswer: A b g




Terms: Criteria which an auditor evaluates information Di
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ff: Easy
b g




Objective: LO 1-1 b g bg




AACSB: Reflective thinking skills b g bg bg




5) The criteria used by an external auditor to evaluate published financial statements are known as
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generally accepted auditing standards. bg bg bg




A) True
B) False A bg




nswer: B b g




Terms: Criteria used by external auditor to evaluate published financial statements Diff:
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Easy
b g




Objective: LO 1-1 b g bg




AACSB: Reflective thinking skills b g bg bg




6) The Sarbanes- bg




Oxley Act establishes standards related to the audits of privately held companies.
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A) True
B) False A bg




nswer: B b g




Terms: Sarbanes- b g




Oxley Act Diff: Easy
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Objective: LO 1-1 b g bg




AACSB: Reflective thinking skills To b g bg bg bg




pic: SOX b g




2

, 7) The Sarbanes- bg




Oxley Act is widely viewed as having ushered in sweeping changes to auditing and financial reporti
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ng.
A) True
B) False A bg




nswer: A b g




Terms: Sarbanes- b g




Oxley Act Diff: Easy bg bg b g




Objective: LO 1-1 b g bg




AACSB: Reflective thinking skills To b g bg bg bg




pic: SOXb g




8) An auditor must be competent and have an independent mental attitude.
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A) True
B) False A bg




nswer: A b g




Terms: Competence and independent mental attitude Diff:
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Easy
b g




Objective: LO 1-1 b g bg




AACSB: Reflective thinking skills Lea b g bg bg bg




rning Objective 1-2
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1) Recording, classifying, and summarizing economic events in a logical manner for the purpose of
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providing financial information for decision making is commonly called:
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A) finance.
B) auditing.
C) accounting.
D) economics. b




Answer: C
g b g




Terms: Recording, classifying, and summarizing economic events D
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iff: Easy
b g




Objective: LO 1-2 b g bg




AACSB: Reflective thinking skills b g bg bg




2) An accountant: bg




A) must possess expertise in the accumulation of audit evidence.
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B) must decide the number and types of items to test.
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C) must have an understanding of the principles and rules that provide the basis for preparing the acc
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ounting information. bg




D) must be a CPA. bg bg bg bg




Answer: C b g




Terms: Distinguishes auditors from accountants
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Diff: Moderateb g




Objective: LO 1-2 b g bg




AACSB: Reflective thinking skills b g bg bg




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