Auditing & Assurance Services
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TEST BANK bb bb
Auditing & Assurance Services: A Systematic
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bb Approach, 11th Edition Chapters 1 - 21
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,Auditing & Assurance Services
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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,
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and Property, Plant, and Equipment
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Chapter 15: Auditing the Financing/Investing Process: Long-Term Liabilities, Stockholders’
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Equity, 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 bb bb bb
Chapter 01 b b b
An Introduction to Assurance and Financial Statement
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bb Auditing
True / False Questions
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1. Independence standards are required for audits of public companies, but not for
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auditsof private companies.
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True False
2. Decision makers demand reliable information that is provided by accountants.
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True False
3. Information asymmetry seldom occurs. bb bb bb
True False
4. Conflicts of interest often occur between absentee owners and managers.
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True False
5. Auditing services and attestation services are the same.
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True False
6. Auditing is a type of attest service.
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True False
7. Testing all transactions that occurred during the period is cost prohibitive.
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True False
Multiple Choice Questions
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, Auditing & Assurance Services bb bb bb
8. Why do auditors generally use a sampling approach to evidence gathering?
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A. Auditors are experts and do not need to look at much to know whether the
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financialstatements are correct or not.
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B. Auditors must balance the cost of the audit with the need
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forprecision.
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C. Auditors must limit their exposure to their auditee to
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maintainindependence.
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D. The auditor's relationship with the auditee is generally adversarial, so the auditor
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willnot have access to all of the financial information of the company.
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9. Which of the following statements best describes a relationship between sample size
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andother elements of auditing?
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A. If materiality increases, so will
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thesample size.
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B. If the desired level of assurance increases, sample sizes
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can besmaller.
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C. If materiality decreases, sample size will need
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toincrease.
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D. There is no relationship between sample size and materiality or the desired
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levelof assurance.
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10. Which of the following statements about the study of auditing is NOT true?
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A. The study of auditing can be valuable to future accountants and business
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decisionmakers whether or not they plan to become auditors.
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B. The study of auditing focuses on learning the analytical and logical skills
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necessary toevaluate the relevance and reliability of information.
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C. The study of auditing focuses on learning the rules, techniques, and
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computationsrequired to analyze financial statements.
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D. The study of auditing begins with the understanding of a coherent logical
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framework and techniques useful for gathering and analyzing evidence about
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others' assertions.
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11. The basic purpose of a financial statement audit is to
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A. Detect b
fraud.
B. Examine individual transactions so that the auditor may certify
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as totheir validity.
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C. Provide assurance regarding whether the auditee's financial statements
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arefairly stated.
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D. Assure the consistent application of correct
bb bb bb bb bb
accountingprocedures.
bb b
bb bb bb
TEST BANK bb bb
Auditing & Assurance Services: A Systematic
bb bb bb bb bb
bb Approach, 11th Edition Chapters 1 - 21
bb bb bb bb bb bb bb
,Auditing & Assurance Services
bb bb bb
Chapter 1: An Introduction to Assurance and Financial Statement Auditing
bb bb bb bb bb bb bb bb bb
Chapter 2: The Financial Statement Auditing Environment
bb bb bb bb bb bb
Chapter 3: Audit Planning, Types of Audit Tests, and Materiality
bb bb bb bb bb bb bb bb bb
Chapter 4: Risk Assessment
bb bb bb
Chapter 5: Evidence and Documentation
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Chapter 6: Internal Control in a Financial Statement Audit
bb bb bb bb bb bb bb bb
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
bb bb bb bb bb bb
Chapter 14: Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets,
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and Property, Plant, and Equipment
bb bb bb bb bb
Chapter 15: Auditing the Financing/Investing Process: Long-Term Liabilities, Stockholders’
bb bb bb bb bb bb bb bb
Equity, and Income Statement Accounts
bb bb bb bb bb
Chapter 16: Auditing the Financing/Investing Process: Cash and Investments
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Chapter 17: Completing the Audit Engagement
bb bb bb bb bb
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
bb bb bb
Chapter 21: Assurance, Attestation, and Internal Auditing Services
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,Auditing & Assurance Services bb bb bb
Chapter 01 b b b
An Introduction to Assurance and Financial Statement
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bb Auditing
True / False Questions
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1. Independence standards are required for audits of public companies, but not for
bb bb bb bb bb bb bb bb bb bb bb
auditsof private companies.
bb b bb bb
True False
2. Decision makers demand reliable information that is provided by accountants.
bb bb bb bb bb bb bb bb bb
True False
3. Information asymmetry seldom occurs. bb bb bb
True False
4. Conflicts of interest often occur between absentee owners and managers.
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True False
5. Auditing services and attestation services are the same.
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True False
6. Auditing is a type of attest service.
bb bb bb bb bb bb
True False
7. Testing all transactions that occurred during the period is cost prohibitive.
bb bb bb bb bb bb bb bb bb bb
True False
Multiple Choice Questions
bb bb
, Auditing & Assurance Services bb bb bb
8. Why do auditors generally use a sampling approach to evidence gathering?
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A. Auditors are experts and do not need to look at much to know whether the
bb bb bb bb bb bb bb bb bb bb bb bb bb bb
financialstatements are correct or not.
bb b bb bb bb bb
B. Auditors must balance the cost of the audit with the need
bb bb bb bb bb bb bb bb bb bb
forprecision.
bb b
C. Auditors must limit their exposure to their auditee to
bb bb bb bb bb bb bb bb
maintainindependence.
bb b
D. The auditor's relationship with the auditee is generally adversarial, so the auditor
bb bb bb bb bb bb bb bb bb bb bb
willnot have access to all of the financial information of the company.
bb b bb bb bb bb bb bb bb bb bb bb bb
9. Which of the following statements best describes a relationship between sample size
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andother elements of auditing?
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A. If materiality increases, so will
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thesample size.
bb b bb
B. If the desired level of assurance increases, sample sizes
bb bb bb bb bb bb bb bb
can besmaller.
bb bb b
C. If materiality decreases, sample size will need
bb bb bb bb bb bb
toincrease.
bb b
D. There is no relationship between sample size and materiality or the desired
bb bb bb bb bb bb bb bb bb bb bb
levelof assurance.
bb b bb
10. Which of the following statements about the study of auditing is NOT true?
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A. The study of auditing can be valuable to future accountants and business
bb bb bb bb bb bb bb bb bb bb bb
decisionmakers whether or not they plan to become auditors.
bb b bb bb bb bb bb bb bb bb
B. The study of auditing focuses on learning the analytical and logical skills
bb bb bb bb bb bb bb bb bb bb bb
necessary toevaluate the relevance and reliability of information.
bb bb b bb bb bb bb bb bb
C. The study of auditing focuses on learning the rules, techniques, and
bb bb bb bb bb bb bb bb bb bb
computationsrequired to analyze financial statements.
bb b bb bb bb bb
D. The study of auditing begins with the understanding of a coherent logical
bb bb bb bb bb bb bb bb bb bb bb
framework and techniques useful for gathering and analyzing evidence about
bb bb bb bb bb bb bb bb bb bb
others' assertions.
bb bb
11. The basic purpose of a financial statement audit is to
bb bb bb bb bb bb bb bb bb
A. Detect b
fraud.
B. Examine individual transactions so that the auditor may certify
bb bb bb bb bb bb bb bb
as totheir validity.
bb bb b bb
C. Provide assurance regarding whether the auditee's financial statements
bb bb bb bb bb bb bb
arefairly stated.
bb b bb
D. Assure the consistent application of correct
bb bb bb bb bb
accountingprocedures.
bb b
