TEST BANK Auditing & Assurance Services: A Systematic Approach, 11th Edition Chapters 1 - 21

Chapter 1: An Introduction to Assurance and Financial Statement Auditing Chapter 2: The Financial Statement Auditing Environment Chapter 3: Audit Planning, Types of Audit Tests, and Materiality Chapter 4: Risk Assessment Chapter 5: Evidence and Documentation Chapter 6: Internal Control in a Financial Statement Audit Chapter 7: Auditing Internal Control over Financial Reporting Chapter 8: Audit Sampling: An Overview and Application to Tests of Controls Chapter 9: Audit Sampling: An Application to Substantive Tests of Account Balances Chapter 10: Auditing the Revenue Process Chapter 11: Auditing the Purchasing Process Chapter 12: Auditing the Human Resource Management Process Chapter 13: Auditing the Inventory Management Process Chapter 14: Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets, and Property, Plant, and Equipment Chapter 15: Auditing the Financing/Investing Process: Long-Term Liabilities, Stockholders’ Equity, and Income Statement Accounts Chapter 16: Auditing the Financing/Investing Process: Cash and Investments Chapter 17: Completing the Audit Engagement Chapter 18: Reports on Audited Financial Statements Chapter 19: Professional Conduct, Independence, and Quality Management Chapter 20: Legal Liability Chapter 21: Assurance, Attestation, and Internal Auditing Services   Chapter 01 An Introduction to Assurance and Financial Statement Auditing True / False Questions 1. Independence standards are required for audits of public companies, but not for audits of private companies. True False 2. Decision makers demand reliable information that is provided by accountants. True False 3. Information asymmetry seldom occurs. True False 4. Conflicts of interest often occur between absentee owners and managers. True False 5. Auditing services and attestation services are the same. True False 6. Auditing is a type of attest service. True False 7. Testing all transactions that occurred during the period is cost prohibitive. True False Multiple Choice Questions 8. Why do auditors generally use a sampling approach to evidence gathering? A. Auditors are experts and do not need to look at much to know whether the financial statements are correct or not. B. Auditors must balance the cost of the audit with the need for precision. C. Auditors must limit their exposure to their auditee to maintain independence. D. The auditor's relationship with the auditee is generally adversarial, so the auditor will not have access to all of the financial information of the company. 9. Which of the following statements best describes a relationship between sample size and other elements of auditing? A. If materiality increases, so will the sample size. B. If the desired level of assurance increases, sample sizes can be smaller. C. If materiality decreases, sample size will need to increase. D. There is no relationship between sample size and materiality or the desired level of assurance. 10. Which of the following statements about the study of auditing is NOT true? A. The study of auditing can be valuable to future accountants and business decision makers whether or not they plan to become auditors. B. The study of auditing focuses on learning the analytical and logical skills necessary to evaluate the relevance and reliability of information. C. The study of auditing focuses on learning the rules, techniques, and computations required to analyze financial statements. D. The study of auditing begins with the understanding of a coherent logical framework and techniques useful for gathering and analyzing evidence about others' assertions. 11. The basic purpose of a financial statement audit is to A. Detect fraud. B. Examine individual transactions so that the auditor may certify as to their validity. C. Provide assurance regarding whether the auditee's financial statements are fairly stated. D. Assure the consistent application of correct accounting procedures. 12. Assurance services may improve all of the following except A. Relevanc e. B. Credibilit y. C. Periodicit y. D. Reliabilit y. 13. Evidence is reliable if it A. Signals the true state of a management assertion. B. Applies to the period being audited. C. Relates to the audit assertion being tested. D. Is consistent with management's assertions. 14. Which of the following best describes the concept of audit risk? A. The risk of the auditor being sued because of association with an auditee. B.