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Auditingb&bAssurancebServices,b7eb(Louwers)b
Chapterb2 ProfessionalbStandards
1) Controlbriskbis
A) thebprobabilitybthatbabmaterialbmisstatementbcouldbnotbbebpreventedborbdetectedbbybthebentity'sbi
nternalbcontrolbpoliciesbandbprocedures.
B) thebprobabilitybthatbabmaterialbmisstatementbcouldboccurbandbnotbbebdetectedbbybauditors'bp
rocedures.
C) thebriskbthatbauditorsbwillbnotbbebablebtobcompletebthebauditbonbabtimelybbasis.
D) thebriskbthatbauditorsbwillbnotbproperlybcontrolbthebstaffbonbthebauditbengagement.
2) Thebresponsibilitiesbprinciplebunderbgenerallybacceptedbauditingbstandardsbdoesbnotbincludeb
whichbofbthebfollowing?
A) Competencebandbcapabilities
B) Independentbattitude
C) Duebcare
D) Planningbandbsupervision
3) Whichbofbthebfollowingbtypesbofbauditors'breportsbdoesbnotbrequirebanbadditionalbparagraphbtobs
upportbthebopinion?
A) Unmodifiedbopinion
B) Adversebopinion
C) Qualifiedbopinion
D) Disclaimerbofbopinion
4) Whichbofbthebfollowingbisbanbelementbofbabsystembofbqualitybcontrolbthatbshouldbbebconsideredbb
ybabpublicbaccountingbfirmbinbestablishingbitsbqualitybcontrolbpoliciesbandbprocedures?
A) Lendingbcredibilitybtobabclient'sbfinancialbstatements
B) Usingbstatisticalbsamplingbtechniques
C) Acceptancebandbcontinuancebofbclientbrelationshipsbandbspecificbengagements
D) MembershipbinbthebCenterbforbPublicbCompanybAuditbFirms
5) Whichbofbthebfollowingbpresumptionsbdoesbnotbrelatebtobthebreliabilitybofbauditbevidence?
A) Thebmorebeffectivebthebclient'sbinternalbcontrol,bthebmorebassurancebitbprovidesbaboutbtheba
ccountingbdatabandbfinancialbstatements.
B) Thebauditors'bopinion,btobbebeconomicallybuseful,bisbformedbwithinbreasonablebtimebandbbasedbo
nbevidencebobtainedbatbabreasonablebcost.
C) Evidencebobtainedbfrombindependentbsourcesboutsidebthebentitybisbmorebreliablebthanbevidencebs
ecuredbsolelybwithinbthebentity.
D) Thebindependentbauditors'bdirectbpersonalbknowledge,bobtainedbthroughbobservationbandbi
nspection,bisbofbhigherbqualitybthanbinformationbobtainedbindirectly.
6) AnbimportantbrolebofbthebPublicbCompanybAccountingbOversightbBoardbisbtoboverseebthe
A) issuancebofbstatementsbbybthebFinancialbAccountingbStandardsbBoard.
B) preparationbandbgradingbofbthebUniformbCPAbExamination.
C) peerbreviewbofbmemberbfirmsbofbthebPrivatebCompaniesbPracticebSection.
D) regulationbofbfirmsbthatbauditbpublicbentities.
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7) Auditbevidencebisbusuallybconsideredbsufficientbwhen
A) itbisbreliable.
B) therebisbenoughbquantitybtobaffordbabreasonablebbasisbforbanbopinionbonbfinancialbstatements.
C) itbhasbthebqualitiesbofbbeingbrelevant,bobjective,bandbfreebfrombunknownbbias.
D) itbhasbbeenbobtainedbthroughbrandombselectionbmethods.
8) Whichbofbthebfollowingbisbnotbconsideredbabtypebofbauditbevidence?
A) Thebentity'sbtrialbbalance
B) Auditors'bcalculations
C) Physicalbobservation
D) Verbalbstatementsbmadebbybclientbpersonnel
9) AnbauditbofbthebfinancialbstatementsbofbCamdenbCorporationbisbbeingbconductedbbybexternalba
uditors.bThebexternalbauditorsbarebexpectedbto:
A) certifybthebcorrectnessbofbCamden'sbfinancialbstatements.
B) makebabcompletebexaminationbofbCamden'sbrecordsbandbverifyballbofbCamden'sbtransactions.
C) givebanbopinionbonbthebfairbpresentationbofbCamden'sbfinancialbstatementsbinbconformitybwithbt
hebapplicablebfinancialbreportingbframeworkb(e.g.,bGAAP,bIFRS).
D) givebanbopinionbonbthebattractivenessbofbCamdenbforbinvestmentbpurposesbandbcritiquebtheb
wisdombandblegalitybofbitsbbusinessbdecisions.
10) Auditorsbtrybtobachievebindependencebinbappearancebinborderbto:
A) maintainbpublicbconfidencebinbthebprofession.
B) becomebindependentbinbfact.
C) complybwithbthebresponsibilitiesbprinciple.
D) maintainbanbunbiasedbmentalbattitude.
11) Thebpreparationbofbanbauditbplanbpriorbtobthebbeginningbofbfieldbworkbisbappropriatelybc
onsideredbdocumentationbof
A) planning.
B) supervision.
C) informationbevaluation.
D) qualitybassurance.
12) Whichbofbthebfollowingbproceduresbwouldbprovidebthebmostbreliablebauditbevidence?
A) Inquiriesbofbthebclient'sbaccountingbstaffbheldbinbprivate
B) Inspectionbofbpre-numberedbclientbshippingbdocuments
C) Inspectionbofbbankbstatementsbobtainedbdirectlybfrombthebclient'sbfinancialbinstitution
D) Analyticalbproceduresbperformedbbybauditorsbonbthebclient'sbtrialbbalance
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13) Whichbofbthebfollowingbwouldbmostblikelybbebabviolationbofbthebindependencebrequirementbf
oundbinbthebresponsibilitiesbprinciplebunderbgenerallybacceptedbauditingbstandards?
A) Anbauditorbonbthebengagementbhasbabdistantbrelativebwhobisbemployedbbybabvendorbthatbdoesbabsi
gnificantbamountbofbbusinessbwithbclients.
B) Thebclient'sbChiefbExecutivebOfficerbgraduatedbfrombthebsamebuniversitybasbthebpartnerbinbc
hargebofbthebaccountingbfirm.
C) Anbauditorbonbthebengagementbownsbabfinancialbinterestbinbthebstockbofbthebclient.
D) Thebclientbprovidesbfinancialbsupportbtobabnumberbofbcharitablebcausesbthatbalsobreceivebs
upportbfrombthebaccountingbfirm.
14) Abvendor'sbinvoicebreceivedbandbheldbbybthebclientbwouldbbebconsideredbwhatbtypebofbe
vidence?
A) External
B) Internal
C) External-internal
D) Writtenbrepresentation
15) Whichbofbthebfollowingbstatementsbisbgenerallybcorrectbaboutbthebappropriatenessbofbauditbe
vidence?
A) Auditors'bdirectbpersonalbknowledge,bobtainedbthroughbobservationbandbinspection,bisbofb
higherbqualitybthanbinformationbobtainedbindirectlybfrombindependentboutsidebsources.
B) Tobbebreliable,bauditbevidencebmustbbebeitherbvalidborbrelevant,bbutbneedbnotbbebboth.
C) Clientbaccountingbdatabalonebmaybbebconsideredbsufficientbappropriatebauditbevidencebtobissueba
nbunmodifiedbopinionbonbclientbfinancialbstatements.
D) Appropriatenessbofbauditbevidencebrefersbtobthebamountbofbcorroborativebevidencebtobbeb
obtained.
16) Thebstandardbauditors'breportbrefersbtobstandardsbofbthebPCAOBbandbGAAPbinbwhichbp
aragraph?
A) StandardsbofbthebPCAOB:bScopebonly;bGAAP:bOpinionbonly
B) StandardsbofbthebPCAOB:bIntroductorybonly;bGAAP:bScopebandbopinion
C) StandardsbofbthebPCAOB:bIntroductorybandbscope;bGAAP:bOpinionbonly
D) StandardsbofbthebPCAOB:bIntroductorybonly;bGAAP:bAllbparagraphs
17) Whichbofbthebfollowingbisbnotbincludedbinbthebauditors'bstandardbreportbrepresentingbanbu
nmodifiedbopinion?
A) Abbriefbindicationbofbthebresponsibilitybofbauditorsbandbmanagementbforbthebfinancialbs
tatements
B) Anbindicationbthatballbappropriatebdisclosuresbhavebbeenbmadebandbincludedbinbthebfinancialbs
tatements
C) Anbindicationbthatbthebauditbwasbconductedbinbaccordancebwithbstandardsbestablishedbbybtheb
PCAOB
D) Thebauditors'bopinionbonbthebfairnessbofbthebfinancialbstatements
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18) Internalbevidence
A) isbobtainedbdirectlybfrombthirdbpartiesbindependentbofbthebclient.
B) originatesboutsidebofbthebclient'sbsystembbutbhasbbeenbreceivedbandbprocessedbbybthebclient.
C) consistsbofbdocumentsbthatbarebproduced,bused,bandbstoredbwithinbthebclient'sbinformationbs
ystem.
D) consistsbofbrepresentationsbmadebbybthebclient'sbofficers,bdirectors,bowners,bandbemployees.
19) Whichbofbthebfollowingbpresumptionsbisbcorrectbaboutbthebreliabilitybofbauditbevidence?
A) Informationbobtainedbindirectlybfromboutsidebsourcesbisbthebmostbreliablebformbofbauditbe
vidence.
B) Tobbebreliable,bauditbevidencebshouldbbebconvincingbratherbthanbpersuasive.
C) Reliabilitybofbauditbevidencebrefersbtobthebamountbofbcorroborativebevidencebobtained.
D) Anbeffectivebsystembofbinternalbcontrolbprovidesbmorebassurancebaboutbthebreliabilitybofbauditbe
vidence.
20) Thebauditors'bresponsibilitybtobexpressbanbopinionbonbthebfinancialbstatementsbis
A) implicitlybrepresentedbinbthebauditors'bstandardbreport.
B) explicitlybrepresentedbinbthebintroductorybparagraphbofbthebauditors'bstandardbreport.
C) explicitlybrepresentedbinbthebscopebparagraphbofbthebauditors'bstandardbreport.
D) explicitlybrepresentedbinbthebopinionbparagraphbofbthebauditors'bstandardbreport.
21) Whichbofbthebfollowingbisbnotbabconceptbfrombthebperformancebprinciplebunderbgenerallyba
cceptedbauditingbstandards?
A) Thebauditorbmustbplanbthebworkbandbproperlybsupervisebanybassistants.
B) Thebauditorbmustbexpressbanbopinionbinbaccordancebwithbthebauditor'sbfindings.
C) Thebauditorbmustbobtainbsufficientbappropriatebevidencebaboutbwhetherbmaterialbmisstatementsb
exist.
D) Thebauditorbmustbdeterminebandbapplybanbappropriatebmaterialityblevelbthroughoutbthebaudit.
22) Underbgenerallybacceptedbauditingbstandards,bwhichbofbthebfollowingbrelatesbtobthebr
esponsibilitiesbprinciple?
A) Thebinitialbplanningbofbthebauditbengagement
B) Thebconfirmationbofbaccountsbreceivable
C) Thebcompletionbofbanbinternalbcontrolbquestionnaire
D) Maintainingbprofessionalbskepticismbandbexercisingbprofessionalbjudgment
23) Whichbofbthebfollowingbrepresentbauditbqualitybguidesbthatbremainbstableboverbtimebandbareba
pplicablebforballbaudits?
A) Auditingbprocedures
B) Auditingbstandards
C) Duebcare
D) Systembofbqualitybcontrol
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Auditingb&bAssurancebServices,b7eb(Louwers)b
Chapterb2 ProfessionalbStandards
1) Controlbriskbis
A) thebprobabilitybthatbabmaterialbmisstatementbcouldbnotbbebpreventedborbdetectedbbybthebentity'sbi
nternalbcontrolbpoliciesbandbprocedures.
B) thebprobabilitybthatbabmaterialbmisstatementbcouldboccurbandbnotbbebdetectedbbybauditors'bp
rocedures.
C) thebriskbthatbauditorsbwillbnotbbebablebtobcompletebthebauditbonbabtimelybbasis.
D) thebriskbthatbauditorsbwillbnotbproperlybcontrolbthebstaffbonbthebauditbengagement.
2) Thebresponsibilitiesbprinciplebunderbgenerallybacceptedbauditingbstandardsbdoesbnotbincludeb
whichbofbthebfollowing?
A) Competencebandbcapabilities
B) Independentbattitude
C) Duebcare
D) Planningbandbsupervision
3) Whichbofbthebfollowingbtypesbofbauditors'breportsbdoesbnotbrequirebanbadditionalbparagraphbtobs
upportbthebopinion?
A) Unmodifiedbopinion
B) Adversebopinion
C) Qualifiedbopinion
D) Disclaimerbofbopinion
4) Whichbofbthebfollowingbisbanbelementbofbabsystembofbqualitybcontrolbthatbshouldbbebconsideredbb
ybabpublicbaccountingbfirmbinbestablishingbitsbqualitybcontrolbpoliciesbandbprocedures?
A) Lendingbcredibilitybtobabclient'sbfinancialbstatements
B) Usingbstatisticalbsamplingbtechniques
C) Acceptancebandbcontinuancebofbclientbrelationshipsbandbspecificbengagements
D) MembershipbinbthebCenterbforbPublicbCompanybAuditbFirms
5) Whichbofbthebfollowingbpresumptionsbdoesbnotbrelatebtobthebreliabilitybofbauditbevidence?
A) Thebmorebeffectivebthebclient'sbinternalbcontrol,bthebmorebassurancebitbprovidesbaboutbtheba
ccountingbdatabandbfinancialbstatements.
B) Thebauditors'bopinion,btobbebeconomicallybuseful,bisbformedbwithinbreasonablebtimebandbbasedbo
nbevidencebobtainedbatbabreasonablebcost.
C) Evidencebobtainedbfrombindependentbsourcesboutsidebthebentitybisbmorebreliablebthanbevidencebs
ecuredbsolelybwithinbthebentity.
D) Thebindependentbauditors'bdirectbpersonalbknowledge,bobtainedbthroughbobservationbandbi
nspection,bisbofbhigherbqualitybthanbinformationbobtainedbindirectly.
6) AnbimportantbrolebofbthebPublicbCompanybAccountingbOversightbBoardbisbtoboverseebthe
A) issuancebofbstatementsbbybthebFinancialbAccountingbStandardsbBoard.
B) preparationbandbgradingbofbthebUniformbCPAbExamination.
C) peerbreviewbofbmemberbfirmsbofbthebPrivatebCompaniesbPracticebSection.
D) regulationbofbfirmsbthatbauditbpublicbentities.
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7) Auditbevidencebisbusuallybconsideredbsufficientbwhen
A) itbisbreliable.
B) therebisbenoughbquantitybtobaffordbabreasonablebbasisbforbanbopinionbonbfinancialbstatements.
C) itbhasbthebqualitiesbofbbeingbrelevant,bobjective,bandbfreebfrombunknownbbias.
D) itbhasbbeenbobtainedbthroughbrandombselectionbmethods.
8) Whichbofbthebfollowingbisbnotbconsideredbabtypebofbauditbevidence?
A) Thebentity'sbtrialbbalance
B) Auditors'bcalculations
C) Physicalbobservation
D) Verbalbstatementsbmadebbybclientbpersonnel
9) AnbauditbofbthebfinancialbstatementsbofbCamdenbCorporationbisbbeingbconductedbbybexternalba
uditors.bThebexternalbauditorsbarebexpectedbto:
A) certifybthebcorrectnessbofbCamden'sbfinancialbstatements.
B) makebabcompletebexaminationbofbCamden'sbrecordsbandbverifyballbofbCamden'sbtransactions.
C) givebanbopinionbonbthebfairbpresentationbofbCamden'sbfinancialbstatementsbinbconformitybwithbt
hebapplicablebfinancialbreportingbframeworkb(e.g.,bGAAP,bIFRS).
D) givebanbopinionbonbthebattractivenessbofbCamdenbforbinvestmentbpurposesbandbcritiquebtheb
wisdombandblegalitybofbitsbbusinessbdecisions.
10) Auditorsbtrybtobachievebindependencebinbappearancebinborderbto:
A) maintainbpublicbconfidencebinbthebprofession.
B) becomebindependentbinbfact.
C) complybwithbthebresponsibilitiesbprinciple.
D) maintainbanbunbiasedbmentalbattitude.
11) Thebpreparationbofbanbauditbplanbpriorbtobthebbeginningbofbfieldbworkbisbappropriatelybc
onsideredbdocumentationbof
A) planning.
B) supervision.
C) informationbevaluation.
D) qualitybassurance.
12) Whichbofbthebfollowingbproceduresbwouldbprovidebthebmostbreliablebauditbevidence?
A) Inquiriesbofbthebclient'sbaccountingbstaffbheldbinbprivate
B) Inspectionbofbpre-numberedbclientbshippingbdocuments
C) Inspectionbofbbankbstatementsbobtainedbdirectlybfrombthebclient'sbfinancialbinstitution
D) Analyticalbproceduresbperformedbbybauditorsbonbthebclient'sbtrialbbalance
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13) Whichbofbthebfollowingbwouldbmostblikelybbebabviolationbofbthebindependencebrequirementbf
oundbinbthebresponsibilitiesbprinciplebunderbgenerallybacceptedbauditingbstandards?
A) Anbauditorbonbthebengagementbhasbabdistantbrelativebwhobisbemployedbbybabvendorbthatbdoesbabsi
gnificantbamountbofbbusinessbwithbclients.
B) Thebclient'sbChiefbExecutivebOfficerbgraduatedbfrombthebsamebuniversitybasbthebpartnerbinbc
hargebofbthebaccountingbfirm.
C) Anbauditorbonbthebengagementbownsbabfinancialbinterestbinbthebstockbofbthebclient.
D) Thebclientbprovidesbfinancialbsupportbtobabnumberbofbcharitablebcausesbthatbalsobreceivebs
upportbfrombthebaccountingbfirm.
14) Abvendor'sbinvoicebreceivedbandbheldbbybthebclientbwouldbbebconsideredbwhatbtypebofbe
vidence?
A) External
B) Internal
C) External-internal
D) Writtenbrepresentation
15) Whichbofbthebfollowingbstatementsbisbgenerallybcorrectbaboutbthebappropriatenessbofbauditbe
vidence?
A) Auditors'bdirectbpersonalbknowledge,bobtainedbthroughbobservationbandbinspection,bisbofb
higherbqualitybthanbinformationbobtainedbindirectlybfrombindependentboutsidebsources.
B) Tobbebreliable,bauditbevidencebmustbbebeitherbvalidborbrelevant,bbutbneedbnotbbebboth.
C) Clientbaccountingbdatabalonebmaybbebconsideredbsufficientbappropriatebauditbevidencebtobissueba
nbunmodifiedbopinionbonbclientbfinancialbstatements.
D) Appropriatenessbofbauditbevidencebrefersbtobthebamountbofbcorroborativebevidencebtobbeb
obtained.
16) Thebstandardbauditors'breportbrefersbtobstandardsbofbthebPCAOBbandbGAAPbinbwhichbp
aragraph?
A) StandardsbofbthebPCAOB:bScopebonly;bGAAP:bOpinionbonly
B) StandardsbofbthebPCAOB:bIntroductorybonly;bGAAP:bScopebandbopinion
C) StandardsbofbthebPCAOB:bIntroductorybandbscope;bGAAP:bOpinionbonly
D) StandardsbofbthebPCAOB:bIntroductorybonly;bGAAP:bAllbparagraphs
17) Whichbofbthebfollowingbisbnotbincludedbinbthebauditors'bstandardbreportbrepresentingbanbu
nmodifiedbopinion?
A) Abbriefbindicationbofbthebresponsibilitybofbauditorsbandbmanagementbforbthebfinancialbs
tatements
B) Anbindicationbthatballbappropriatebdisclosuresbhavebbeenbmadebandbincludedbinbthebfinancialbs
tatements
C) Anbindicationbthatbthebauditbwasbconductedbinbaccordancebwithbstandardsbestablishedbbybtheb
PCAOB
D) Thebauditors'bopinionbonbthebfairnessbofbthebfinancialbstatements
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18) Internalbevidence
A) isbobtainedbdirectlybfrombthirdbpartiesbindependentbofbthebclient.
B) originatesboutsidebofbthebclient'sbsystembbutbhasbbeenbreceivedbandbprocessedbbybthebclient.
C) consistsbofbdocumentsbthatbarebproduced,bused,bandbstoredbwithinbthebclient'sbinformationbs
ystem.
D) consistsbofbrepresentationsbmadebbybthebclient'sbofficers,bdirectors,bowners,bandbemployees.
19) Whichbofbthebfollowingbpresumptionsbisbcorrectbaboutbthebreliabilitybofbauditbevidence?
A) Informationbobtainedbindirectlybfromboutsidebsourcesbisbthebmostbreliablebformbofbauditbe
vidence.
B) Tobbebreliable,bauditbevidencebshouldbbebconvincingbratherbthanbpersuasive.
C) Reliabilitybofbauditbevidencebrefersbtobthebamountbofbcorroborativebevidencebobtained.
D) Anbeffectivebsystembofbinternalbcontrolbprovidesbmorebassurancebaboutbthebreliabilitybofbauditbe
vidence.
20) Thebauditors'bresponsibilitybtobexpressbanbopinionbonbthebfinancialbstatementsbis
A) implicitlybrepresentedbinbthebauditors'bstandardbreport.
B) explicitlybrepresentedbinbthebintroductorybparagraphbofbthebauditors'bstandardbreport.
C) explicitlybrepresentedbinbthebscopebparagraphbofbthebauditors'bstandardbreport.
D) explicitlybrepresentedbinbthebopinionbparagraphbofbthebauditors'bstandardbreport.
21) Whichbofbthebfollowingbisbnotbabconceptbfrombthebperformancebprinciplebunderbgenerallyba
cceptedbauditingbstandards?
A) Thebauditorbmustbplanbthebworkbandbproperlybsupervisebanybassistants.
B) Thebauditorbmustbexpressbanbopinionbinbaccordancebwithbthebauditor'sbfindings.
C) Thebauditorbmustbobtainbsufficientbappropriatebevidencebaboutbwhetherbmaterialbmisstatementsb
exist.
D) Thebauditorbmustbdeterminebandbapplybanbappropriatebmaterialityblevelbthroughoutbthebaudit.
22) Underbgenerallybacceptedbauditingbstandards,bwhichbofbthebfollowingbrelatesbtobthebr
esponsibilitiesbprinciple?
A) Thebinitialbplanningbofbthebauditbengagement
B) Thebconfirmationbofbaccountsbreceivable
C) Thebcompletionbofbanbinternalbcontrolbquestionnaire
D) Maintainingbprofessionalbskepticismbandbexercisingbprofessionalbjudgment
23) Whichbofbthebfollowingbrepresentbauditbqualitybguidesbthatbremainbstableboverbtimebandbareba
pplicablebforballbaudits?
A) Auditingbprocedures
B) Auditingbstandards
C) Duebcare
D) Systembofbqualitybcontrol
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