TEST BANK %nj
Auditing and Assurance Services (an integrated approach)
%nj %nj %nj %nj %nj %nj
by Randal J. Elder Mark S. Beasley Chris E. Hogan Alvin A.
%nj %nj %nj %nj %nj %nj %nj %nj %nj %nj %nj
Arens 17th edition
%nj %nj %nj
FULL TE ST BANK!!! %nj 1 %nj
,Auditing and Assurance Services, 17e (Arens/Elder/Beasley)
Chapter 1 The Demand for Audit and Other Assurance Services
Learning Objective 1-1
1) The Sarbanes-Oxley Act applies to which of the following companies?
A) All companies
B) Privately held companies
C) Public companies
D) All public companies and privately held companies with assets greater than $500 million
Answer: C
Terms: Sarbanes-Oxley Act
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking skills
Topic: SOX
2) Which of the following is considered audit evidence?
A)
Oral statements Written Auditor
made by management Communications Observation
Y N N
B)
Oral statements Written Auditor
made by management Communications Observation
N Y Y
C)
Oral statements Written Auditor
made by management Communications Observation
Y Y Y
D)
Oral statements Written Auditor
made by management Communications Observation
N N Y
Answer: C
Terms: Audit evidence
Diff: Moderate
Objective: LO 1-1
AACSB: Reflective thinking skills
2
,3) Evidence %njis %njparamount %njto %njaudit %njand %njattestation %njengagements. %njList %njthe %njfour %njbasic
%njtypes %njof %njaudit %njevidence.
Answer: % n j The %njfour %njtypes %njof %njaudit %njand %njattestation %njevidence %njinclude:
1. Electronic %njand %njdocumentary %njdata %njabout %njtransactions
2. Written %njand %njelectronic %njcommunications %njwith %njoutsiders
3. Observations %njby %njthe %njauditor
4. Oral %njtestimony%njof %njthe %njauditee
%nj(client) %njTerms: %njBasic %njtypes %njof
%njaudit %njevidence %njDiff: % n j Easy
Objective: % n j LO %nj1-1
AACSB: % n j Reflective %njthinking %njskills
4) The %njcriteria %njby %njwhich %njan %njauditor %njevaluates %njthe %njinformation %njunder %njaudit %njmay
%njvary %njwith %njthe %njinformation %njbeing %njaudited.
A) True
B) False
%njAnswer:
%njA
Terms: %njCriteria %njwhich %njan %njauditor %njevaluates
%njinformation %njDiff: % n j Easy
Objective: % n j LO %nj1-1
AACSB: % n j Reflective %njthinking %njskills
5) The %njcriteria %njused %njby %njan %njexternal %njauditor %njto %njevaluate %njpublished %njfinancial
%njstatements %njare %njknown %njas %njgenerally %njaccepted %njauditing %njstandards.
A) True
B) False
%njAnswer:
%njB
Terms: % n j Criteria %njused %njby %njexternal %njauditor %njto %njevaluate %njpublished %njfinancial
%njstatements %njDiff: % n j Easy
Objective: % n j LO %nj1-1
AACSB: % n j Reflective %njthinking %njskills
6) The %njSarbanes-Oxley %njAct %njestablishes %njstandards %njrelated %njto %njthe %njaudits %njof
%njprivately %njheld %njcompanies.
A) True
B) False
%njAnswer:
%njB
Terms: %njSarbanes-Oxley
%njAct %njDiff: % n j Easy
Objective: % n j LO %nj1-1
AACSB: %njReflective %njthinking %njskills
%njTopic: % n j SOX
3
, 7) The %njSarbanes-Oxley %njAct %njis %njwidely %njviewed %njas %njhaving %njushered %njin %njsweeping
%njchanges %njto %njauditing %njand %njfinancial %njreporting.
A) True
B) False
%njAnswer:
%njA
Terms: %njSarbanes-Oxley
%njAct %njDiff: % n j Easy
Objective: % n j LO %nj1-1
AACSB: %njReflective %njthinking %njskills
%njTopic: % n j SOX
8) An %njauditor %njmust %njbe %njcompetent %njand %njhave %njan %njindependent %njmental %njattitude.
A) True
B) False
%njAnswer:
%njA
Terms: % n j Competence %njand %njindependent %njmental
%njattitude %njDiff: % n j Easy
Objective: % n j LO %nj1-1
AACSB: %njReflective %njthinking %njskills
%nj Learning %njObjective %nj1-2
1) Recording, %njclassifying, %njand %njsummarizing %njeconomic %njevents %njin %nja %njlogical %njmanner %njfor
%njthe %njpurpose %njof %njproviding %njfinancial %njinformation %njfor %njdecision %njmaking %njis %njcommonly
%njcalled:
A) finance.
B) auditing.
C) accounting.
D) economics.
%njAnswer:
% nj C
Terms: % n j Recording, %njclassifying, %njand %njsummarizing %njeconomic
%njevents %njDiff: % n j Easy
Objective: % n j LO %nj1-2
AACSB: % n j Reflective %njthinking %njskills
2) An %njaccountant:
A) must %njpossess %njexpertise %njin %njthe %njaccumulation %njof %njaudit %njevidence.
B) must %njdecide %njthe %njnumber %njand %njtypes %njof %njitems %njto %njtest.
C) must %njhave %njan %njunderstanding %njof %njthe %njprinciples %njand %njrules %njthat %njprovide %njthe %njbasis
%njfor %njpreparing %njthe %njaccounting %njinformation.
D) must %njbe %nja
%njCPA.
Answer: % n j C
Terms: %nj Distinguishes %njauditors %njfrom
%njaccountants %njDiff: % n j Moderate
4
Auditing and Assurance Services (an integrated approach)
%nj %nj %nj %nj %nj %nj
by Randal J. Elder Mark S. Beasley Chris E. Hogan Alvin A.
%nj %nj %nj %nj %nj %nj %nj %nj %nj %nj %nj
Arens 17th edition
%nj %nj %nj
FULL TE ST BANK!!! %nj 1 %nj
,Auditing and Assurance Services, 17e (Arens/Elder/Beasley)
Chapter 1 The Demand for Audit and Other Assurance Services
Learning Objective 1-1
1) The Sarbanes-Oxley Act applies to which of the following companies?
A) All companies
B) Privately held companies
C) Public companies
D) All public companies and privately held companies with assets greater than $500 million
Answer: C
Terms: Sarbanes-Oxley Act
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking skills
Topic: SOX
2) Which of the following is considered audit evidence?
A)
Oral statements Written Auditor
made by management Communications Observation
Y N N
B)
Oral statements Written Auditor
made by management Communications Observation
N Y Y
C)
Oral statements Written Auditor
made by management Communications Observation
Y Y Y
D)
Oral statements Written Auditor
made by management Communications Observation
N N Y
Answer: C
Terms: Audit evidence
Diff: Moderate
Objective: LO 1-1
AACSB: Reflective thinking skills
2
,3) Evidence %njis %njparamount %njto %njaudit %njand %njattestation %njengagements. %njList %njthe %njfour %njbasic
%njtypes %njof %njaudit %njevidence.
Answer: % n j The %njfour %njtypes %njof %njaudit %njand %njattestation %njevidence %njinclude:
1. Electronic %njand %njdocumentary %njdata %njabout %njtransactions
2. Written %njand %njelectronic %njcommunications %njwith %njoutsiders
3. Observations %njby %njthe %njauditor
4. Oral %njtestimony%njof %njthe %njauditee
%nj(client) %njTerms: %njBasic %njtypes %njof
%njaudit %njevidence %njDiff: % n j Easy
Objective: % n j LO %nj1-1
AACSB: % n j Reflective %njthinking %njskills
4) The %njcriteria %njby %njwhich %njan %njauditor %njevaluates %njthe %njinformation %njunder %njaudit %njmay
%njvary %njwith %njthe %njinformation %njbeing %njaudited.
A) True
B) False
%njAnswer:
%njA
Terms: %njCriteria %njwhich %njan %njauditor %njevaluates
%njinformation %njDiff: % n j Easy
Objective: % n j LO %nj1-1
AACSB: % n j Reflective %njthinking %njskills
5) The %njcriteria %njused %njby %njan %njexternal %njauditor %njto %njevaluate %njpublished %njfinancial
%njstatements %njare %njknown %njas %njgenerally %njaccepted %njauditing %njstandards.
A) True
B) False
%njAnswer:
%njB
Terms: % n j Criteria %njused %njby %njexternal %njauditor %njto %njevaluate %njpublished %njfinancial
%njstatements %njDiff: % n j Easy
Objective: % n j LO %nj1-1
AACSB: % n j Reflective %njthinking %njskills
6) The %njSarbanes-Oxley %njAct %njestablishes %njstandards %njrelated %njto %njthe %njaudits %njof
%njprivately %njheld %njcompanies.
A) True
B) False
%njAnswer:
%njB
Terms: %njSarbanes-Oxley
%njAct %njDiff: % n j Easy
Objective: % n j LO %nj1-1
AACSB: %njReflective %njthinking %njskills
%njTopic: % n j SOX
3
, 7) The %njSarbanes-Oxley %njAct %njis %njwidely %njviewed %njas %njhaving %njushered %njin %njsweeping
%njchanges %njto %njauditing %njand %njfinancial %njreporting.
A) True
B) False
%njAnswer:
%njA
Terms: %njSarbanes-Oxley
%njAct %njDiff: % n j Easy
Objective: % n j LO %nj1-1
AACSB: %njReflective %njthinking %njskills
%njTopic: % n j SOX
8) An %njauditor %njmust %njbe %njcompetent %njand %njhave %njan %njindependent %njmental %njattitude.
A) True
B) False
%njAnswer:
%njA
Terms: % n j Competence %njand %njindependent %njmental
%njattitude %njDiff: % n j Easy
Objective: % n j LO %nj1-1
AACSB: %njReflective %njthinking %njskills
%nj Learning %njObjective %nj1-2
1) Recording, %njclassifying, %njand %njsummarizing %njeconomic %njevents %njin %nja %njlogical %njmanner %njfor
%njthe %njpurpose %njof %njproviding %njfinancial %njinformation %njfor %njdecision %njmaking %njis %njcommonly
%njcalled:
A) finance.
B) auditing.
C) accounting.
D) economics.
%njAnswer:
% nj C
Terms: % n j Recording, %njclassifying, %njand %njsummarizing %njeconomic
%njevents %njDiff: % n j Easy
Objective: % n j LO %nj1-2
AACSB: % n j Reflective %njthinking %njskills
2) An %njaccountant:
A) must %njpossess %njexpertise %njin %njthe %njaccumulation %njof %njaudit %njevidence.
B) must %njdecide %njthe %njnumber %njand %njtypes %njof %njitems %njto %njtest.
C) must %njhave %njan %njunderstanding %njof %njthe %njprinciples %njand %njrules %njthat %njprovide %njthe %njbasis
%njfor %njpreparing %njthe %njaccounting %njinformation.
D) must %njbe %nja
%njCPA.
Answer: % n j C
Terms: %nj Distinguishes %njauditors %njfrom
%njaccountants %njDiff: % n j Moderate
4
