Auditing & Assurance Services
b b b
TEST BANK b b
Auditing & Assurance Services: A Systematic
b b b b b
b Approach, 11th Edition Chapters 1 - 21
b b b b b b b
,Auditing & Assurance Services
b b b
Chapter b1: bAn bIntroduction bto bAssurance band bFinancial bStatement bAuditing
Chapter b2: bThe bFinancial bStatement bAuditing bEnvironment
Chapter b3: bAudit bPlanning, bTypes bof bAudit bTests, band bMateriality
Chapter b4: bRisk bAssessment
Chapter b5: bEvidence band bDocumentation
Chapter b6: bInternal bControl bin ba bFinancial bStatement bAudit
Chapter b7: bAuditing bInternal bControl bover bFinancial bReporting
Chapter b8: bAudit bSampling: bAn bOverview band bApplication bto bTests bof bControls
Chapter b9: bAudit bSampling: bAn bApplication bto bSubstantive bTests bof bAccount bBalances
Chapter b10: bAuditing bthe bRevenue bProcess
Chapter b11: bAuditing bthe bPurchasing bProcess
Chapter b12: bAuditing bthe bHuman bResource bManagement bProcess
Chapter b13: bAuditing bthe bInventory bManagement bProcess
Chapter b14: bAuditing bthe bFinancing/Investing bProcess: bPrepaid bExpenses, bIntangible
bAssets, band bProperty, bPlant, band bEquipment
Chapter b15: bAuditing bthe bFinancing/Investing bProcess: bLong-Term bLiabilities,
bStockholders’ bEquity, band bIncome bStatement bAccounts
Chapter b16: bAuditing bthe bFinancing/Investing bProcess: bCash band bInvestments
Chapter b17: bCompleting bthe bAudit bEngagement
Chapter b18: bReports bon bAudited bFinancial bStatements
Chapter b19: bProfessional bConduct, bIndependence, band bQuality bManagement
Chapter b20: bLegal bLiability
Chapter b21: bAssurance, bAttestation, band bInternal bAuditing bServices
,Auditing & Assurance Services
b b b
Chapter b 01b
An b Introduction b to b Assurance b and b Financial b Statement
b Auditing
True b / b False b Questions
1. Independence b standards b are b required b for b audits b of b public b companies, b but b not b for
b auditsbof bprivate bcompanies.
True False
2. Decision b makers b demand b reliable b information b that b is b provided b by b accountants.
True False
3. Information b asymmetry b seldom b occurs.
True False
4. Conflicts b of b interest b often b occur b between b absentee b owners b and b managers.
True False
5. Auditing b services b and b attestation b services b are b the b same.
True False
6. Auditing bis ba btype bof battest bservice.
True False
7. Testing ball btransactions bthat boccurred bduring b the bperiod bis bcost bprohibitive.
True False
Multiple bChoice b Questions
, Auditing & Assurance Services
b b b
8. Why bdo bauditors bgenerally buse ba bsampling bapproach bto bevidence bgathering?
A. Auditors b are bexperts b and b do bnot b need bto blook bat bmuch bto bknow b whether bthe
b financialbstatements bare bcorrect bor bnot.
B. Auditors b must bbalance bthe bcost bof bthe baudit bwith bthe
b need b forb
precision.
C. Auditors bmust blimit btheir bexposure bto btheir bauditee bto
bmaintainb independence.
D. The bauditor's b relationship bwith bthe bauditee bis bgenerally badversarial, bso bthe
b auditor b willb
not bhave baccess bto ball bof bthe bfinancial binformation bof bthe bcompany.
9. Which b of b the b following b statements b best b describes b a b relationship b between b sample
b size b andb
other belements bof bauditing?
A. If b materiality b increases, b so b will
b thebsample bsize.
B. If b the b desired b level b of b assurance b increases, b sample b sizes
b can b beb smaller.
C. If bmateriality bdecreases, bsample bsize bwill bneed
btob increase.
D. There b is bno b relationship b between bsample b size b and b materiality b or bthe b desired
b levelbof bassurance.
10. Which b of b the b following b statements b about b the b study b of b auditing b is b NOT b true?
A. The b study b of b auditing b can b be b valuable b to b future b accountants b and b business
b decisionbmakers bwhether bor bnot bthey bplan bto bbecome bauditors.
B. The b study b of b auditing b focuses b on b learning b the b analytical b and b logical b skills
b necessary b tobevaluate bthe brelevance band breliability bof binformation.
C. The b study b of b auditing b focuses b on b learning b the b rules, b techniques, b and
b computations b required bto banalyze bfinancial bstatements.
D. The b study b of b auditing b begins b with b the b understanding b of b a b coherent b logical
b framework band btechniques buseful bfor bgathering band banalyzing bevidence babout
bothers' bassertions.
11. The bbasic bpurpose bof ba bfinancial b statement baudit bis bto
A. Detect
fraud.
b
B. Examine b individual b transactions b so b that b the b auditor b may b certify
b as b tob
their bvalidity.
C. Provide b assurance b regarding b whether b the b auditee's b financial b statements
b areb fairly bstated.
D. Assure b the b consistent b application b of b correct
b accountingbprocedures.
b b b
TEST BANK b b
Auditing & Assurance Services: A Systematic
b b b b b
b Approach, 11th Edition Chapters 1 - 21
b b b b b b b
,Auditing & Assurance Services
b b b
Chapter b1: bAn bIntroduction bto bAssurance band bFinancial bStatement bAuditing
Chapter b2: bThe bFinancial bStatement bAuditing bEnvironment
Chapter b3: bAudit bPlanning, bTypes bof bAudit bTests, band bMateriality
Chapter b4: bRisk bAssessment
Chapter b5: bEvidence band bDocumentation
Chapter b6: bInternal bControl bin ba bFinancial bStatement bAudit
Chapter b7: bAuditing bInternal bControl bover bFinancial bReporting
Chapter b8: bAudit bSampling: bAn bOverview band bApplication bto bTests bof bControls
Chapter b9: bAudit bSampling: bAn bApplication bto bSubstantive bTests bof bAccount bBalances
Chapter b10: bAuditing bthe bRevenue bProcess
Chapter b11: bAuditing bthe bPurchasing bProcess
Chapter b12: bAuditing bthe bHuman bResource bManagement bProcess
Chapter b13: bAuditing bthe bInventory bManagement bProcess
Chapter b14: bAuditing bthe bFinancing/Investing bProcess: bPrepaid bExpenses, bIntangible
bAssets, band bProperty, bPlant, band bEquipment
Chapter b15: bAuditing bthe bFinancing/Investing bProcess: bLong-Term bLiabilities,
bStockholders’ bEquity, band bIncome bStatement bAccounts
Chapter b16: bAuditing bthe bFinancing/Investing bProcess: bCash band bInvestments
Chapter b17: bCompleting bthe bAudit bEngagement
Chapter b18: bReports bon bAudited bFinancial bStatements
Chapter b19: bProfessional bConduct, bIndependence, band bQuality bManagement
Chapter b20: bLegal bLiability
Chapter b21: bAssurance, bAttestation, band bInternal bAuditing bServices
,Auditing & Assurance Services
b b b
Chapter b 01b
An b Introduction b to b Assurance b and b Financial b Statement
b Auditing
True b / b False b Questions
1. Independence b standards b are b required b for b audits b of b public b companies, b but b not b for
b auditsbof bprivate bcompanies.
True False
2. Decision b makers b demand b reliable b information b that b is b provided b by b accountants.
True False
3. Information b asymmetry b seldom b occurs.
True False
4. Conflicts b of b interest b often b occur b between b absentee b owners b and b managers.
True False
5. Auditing b services b and b attestation b services b are b the b same.
True False
6. Auditing bis ba btype bof battest bservice.
True False
7. Testing ball btransactions bthat boccurred bduring b the bperiod bis bcost bprohibitive.
True False
Multiple bChoice b Questions
, Auditing & Assurance Services
b b b
8. Why bdo bauditors bgenerally buse ba bsampling bapproach bto bevidence bgathering?
A. Auditors b are bexperts b and b do bnot b need bto blook bat bmuch bto bknow b whether bthe
b financialbstatements bare bcorrect bor bnot.
B. Auditors b must bbalance bthe bcost bof bthe baudit bwith bthe
b need b forb
precision.
C. Auditors bmust blimit btheir bexposure bto btheir bauditee bto
bmaintainb independence.
D. The bauditor's b relationship bwith bthe bauditee bis bgenerally badversarial, bso bthe
b auditor b willb
not bhave baccess bto ball bof bthe bfinancial binformation bof bthe bcompany.
9. Which b of b the b following b statements b best b describes b a b relationship b between b sample
b size b andb
other belements bof bauditing?
A. If b materiality b increases, b so b will
b thebsample bsize.
B. If b the b desired b level b of b assurance b increases, b sample b sizes
b can b beb smaller.
C. If bmateriality bdecreases, bsample bsize bwill bneed
btob increase.
D. There b is bno b relationship b between bsample b size b and b materiality b or bthe b desired
b levelbof bassurance.
10. Which b of b the b following b statements b about b the b study b of b auditing b is b NOT b true?
A. The b study b of b auditing b can b be b valuable b to b future b accountants b and b business
b decisionbmakers bwhether bor bnot bthey bplan bto bbecome bauditors.
B. The b study b of b auditing b focuses b on b learning b the b analytical b and b logical b skills
b necessary b tobevaluate bthe brelevance band breliability bof binformation.
C. The b study b of b auditing b focuses b on b learning b the b rules, b techniques, b and
b computations b required bto banalyze bfinancial bstatements.
D. The b study b of b auditing b begins b with b the b understanding b of b a b coherent b logical
b framework band btechniques buseful bfor bgathering band banalyzing bevidence babout
bothers' bassertions.
11. The bbasic bpurpose bof ba bfinancial b statement baudit bis bto
A. Detect
fraud.
b
B. Examine b individual b transactions b so b that b the b auditor b may b certify
b as b tob
their bvalidity.
C. Provide b assurance b regarding b whether b the b auditee's b financial b statements
b areb fairly bstated.
D. Assure b the b consistent b application b of b correct
b accountingbprocedures.
