Auditing #cxand #cxAssurance #cxServices, #cx16e #cx(Arens/Elder/Beasley)
#cxChapter #cx1 # c x The #cxDemand #cxfor #cxAudit #cxand #cxOther
#cxAssurance #cxServices
1.1 # c x #cx Learning #cxObjective #cx1-1
1) In #cxthe #cxauditing #cxprocess
A) the #cxtypes #cxand #cxamounts #cxof #cxevidence #cxremain #cxconstant #cxfrom #cxaudit #cxto #cxaudit.
B) the #cxcriteria #cxfor #cxevaluating #cxinformation #cxwill #cxnot #cxvary #cxdepending #cxon #cxthe
#cxinformation #cxbeing #cxaudited.
C) the #cxaudit #cxreport #cxcommunicates #cxthe #cxauditor's #cxfindings #cxto #cxusers.
D) records #cxare #cxgathered #cxby #cxthe #cxauditor #cxto #cxdetermine #cxwhether #cxthe #cxaudited #cxinformation
#cxis #cxstated #cxin #cxaccordance #cxwith #cxSEC #cxstandards.
Answer: # c x C
Terms: # c x Audit #cxprocess
#cxDiff: # c x Moderate
#cxObjective: # c x LO #cx1-1
AACSB: # c x Reflective #cxthinking
2) Which #cxof #cxthe #cxfollowing #cxis #cxconsidered #cxaudit #cxevidence?
A)
Oral #cxstatements Written Auditor
#cxmade #cxby Communications
#cx Observation
#cx
#cxmanagement
Y N N
B)
Oral #cxstatements Written Auditor
made #cxby Communications Observation
#cxmanagement
N Y Y
C)
Oral #cxstatements Written Auditor
made #cxby Communications Observation
#cxmanagement
Y Y Y
D)
Oral #cxstatements Written Auditor
#cxmade #cxby Communications
#cx Observation
#cx
#cxmanagement
N N Y
Answer: # c x C
Terms: # c x Audit
#cxevidence #cxDiff:
1
Copyright #cx© #cx2017 #cxPearson
#cxEducation, #cxInc.
, Easy
# cx
Objective: # c x LO #cx1-1
AACSB: # c x Reflective #cxthinking
2
Copyright #cx© #cx2017 #cxPearson
#cxEducation, #cxInc.
,3) Which of the following can be used as a criteria for evaluating information being audited?
A) International Financial Reporting Standards (IFRS)
B) Generally Accepted Accounting Principles (GAAP)
C) Internal Revenue Code (IRC)
D) all of the above
Answer: D
Terms: Criteria by which an auditor evaluates information
Diff: Moderate
Objective: LO 1-1
AACSB: Reflective thinking
4) Evidence is paramount to audit and attestation engagements. List the four basic types of audit
evidence.
Answer: The four types of audit and attestation evidence include
1. Electronic and documentary data about transactions
2. Written and electronic communications with outsiders
3. Observations by the auditor
4. Oral testimony of the auditee (client)
Terms: Basic types of audit evidence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
5) The criteria by which an auditor evaluates the information under audit may vary with the
information being audited.
Answer: TRUE
Terms: Criteria by which an auditor evaluates information
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
6) One criteria used by an external auditor to evaluate published financial statements is known as
generally accepted auditing standards.
Answer: FALSE
Terms: Criteria used by external auditor to evaluate published financial statements
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
7) Auditors strive to maintain a high level of independence to keep the confidence of users
relying on their reports.
Answer: TRUE
Terms: Independence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
3
Copyright #cx© #cx2017 #cxPearson
#cxEducation, #cxInc.
, 8) To #cxperform #cxan #cxaudit, #cxthere #cxmust #cxbe #cxinformation #cxin #cxa #cxverifiable #cxform #cxand
#cxsome #cxcriteria #cxby #cxwhich #cxthe #cxauditor #cxcan #cxevaluate #cxthe #cxinformation.
Answer: # c x TRUE
#cxTerms:
# c x Independence #cxDiff:
# c x Easy
Objective: # c x LO #cx1-1
AACSB: # c x Reflective #cxthinking
9) An #cxauditor #cxmust #cxbe #cxcompetent #cxand #cxhave #cxan #cxindependent #cxmental
#cxattitude. #cxAnswer: # c x TRUE
Terms: # c x Criteria #cxused #cxby #cxexternal #cxauditor #cxto #cxevaluate #cxpublished #cxfinancial
#cxstatements #cxDiff: # c x Easy
Objective: # c x LO #cx1-1
AACSB: # c x Reflective #cxthinking
1.2 # c x #cx Learning #cxObjective #cx1-2
1) Recording, #cxclassifying, #cxand #cxsummarizing #cxeconomic #cxevents #cxin #cxa #cxlogical #cxmanner #cxfor
#cxthe #cxpurpose #cxof #cxproviding #cxfinancial #cxinformation #cxfor #cxdecision #cxmaking #cxis #cxcommonly
#cxcalled
A) finance.
B) auditing.
C) accounting.
D) economics.
#cxAnswer:
# cx C
Terms: # c x Recording, #cxclassifying, #cxand #cxsummarizing #cxeconomic
#cxevents #cxDiff: # c x Easy
Objective: # c x LO #cx1-2
AACSB: # c x Reflective #cxthinking
2) An #cxaccountant
A) must #cxpossess #cxexpertise #cxin #cxthe #cxaccumulation #cxof #cxaudit #cxevidence.
B) must #cxdecide #cxthe #cxnumber #cxand #cxtypes #cxof #cxitems #cxto #cxtest.
C) must #cxhave #cxan #cxunderstanding #cxof #cxthe #cxprinciples #cxand #cxrules #cxthat #cxprovide #cxthe #cxbasis #cxfor
#cxpreparing #cxthe #cxaccounting #cxinformation.
D) must #cxbe #cxa
#cxCPA. #cxAnswer:
# cx C
Terms: # c x Distinguishes #cxauditors #cxfrom
#cxaccountants #cxDiff: # c x Moderate
Objective: # c x LO #cx1-2
AACSB: # c x Reflective #cxthinking
4
Copyright #cx© #cx2017 #cxPearson
#cxEducation, #cxInc.
#cxChapter #cx1 # c x The #cxDemand #cxfor #cxAudit #cxand #cxOther
#cxAssurance #cxServices
1.1 # c x #cx Learning #cxObjective #cx1-1
1) In #cxthe #cxauditing #cxprocess
A) the #cxtypes #cxand #cxamounts #cxof #cxevidence #cxremain #cxconstant #cxfrom #cxaudit #cxto #cxaudit.
B) the #cxcriteria #cxfor #cxevaluating #cxinformation #cxwill #cxnot #cxvary #cxdepending #cxon #cxthe
#cxinformation #cxbeing #cxaudited.
C) the #cxaudit #cxreport #cxcommunicates #cxthe #cxauditor's #cxfindings #cxto #cxusers.
D) records #cxare #cxgathered #cxby #cxthe #cxauditor #cxto #cxdetermine #cxwhether #cxthe #cxaudited #cxinformation
#cxis #cxstated #cxin #cxaccordance #cxwith #cxSEC #cxstandards.
Answer: # c x C
Terms: # c x Audit #cxprocess
#cxDiff: # c x Moderate
#cxObjective: # c x LO #cx1-1
AACSB: # c x Reflective #cxthinking
2) Which #cxof #cxthe #cxfollowing #cxis #cxconsidered #cxaudit #cxevidence?
A)
Oral #cxstatements Written Auditor
#cxmade #cxby Communications
#cx Observation
#cx
#cxmanagement
Y N N
B)
Oral #cxstatements Written Auditor
made #cxby Communications Observation
#cxmanagement
N Y Y
C)
Oral #cxstatements Written Auditor
made #cxby Communications Observation
#cxmanagement
Y Y Y
D)
Oral #cxstatements Written Auditor
#cxmade #cxby Communications
#cx Observation
#cx
#cxmanagement
N N Y
Answer: # c x C
Terms: # c x Audit
#cxevidence #cxDiff:
1
Copyright #cx© #cx2017 #cxPearson
#cxEducation, #cxInc.
, Easy
# cx
Objective: # c x LO #cx1-1
AACSB: # c x Reflective #cxthinking
2
Copyright #cx© #cx2017 #cxPearson
#cxEducation, #cxInc.
,3) Which of the following can be used as a criteria for evaluating information being audited?
A) International Financial Reporting Standards (IFRS)
B) Generally Accepted Accounting Principles (GAAP)
C) Internal Revenue Code (IRC)
D) all of the above
Answer: D
Terms: Criteria by which an auditor evaluates information
Diff: Moderate
Objective: LO 1-1
AACSB: Reflective thinking
4) Evidence is paramount to audit and attestation engagements. List the four basic types of audit
evidence.
Answer: The four types of audit and attestation evidence include
1. Electronic and documentary data about transactions
2. Written and electronic communications with outsiders
3. Observations by the auditor
4. Oral testimony of the auditee (client)
Terms: Basic types of audit evidence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
5) The criteria by which an auditor evaluates the information under audit may vary with the
information being audited.
Answer: TRUE
Terms: Criteria by which an auditor evaluates information
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
6) One criteria used by an external auditor to evaluate published financial statements is known as
generally accepted auditing standards.
Answer: FALSE
Terms: Criteria used by external auditor to evaluate published financial statements
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
7) Auditors strive to maintain a high level of independence to keep the confidence of users
relying on their reports.
Answer: TRUE
Terms: Independence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking
3
Copyright #cx© #cx2017 #cxPearson
#cxEducation, #cxInc.
, 8) To #cxperform #cxan #cxaudit, #cxthere #cxmust #cxbe #cxinformation #cxin #cxa #cxverifiable #cxform #cxand
#cxsome #cxcriteria #cxby #cxwhich #cxthe #cxauditor #cxcan #cxevaluate #cxthe #cxinformation.
Answer: # c x TRUE
#cxTerms:
# c x Independence #cxDiff:
# c x Easy
Objective: # c x LO #cx1-1
AACSB: # c x Reflective #cxthinking
9) An #cxauditor #cxmust #cxbe #cxcompetent #cxand #cxhave #cxan #cxindependent #cxmental
#cxattitude. #cxAnswer: # c x TRUE
Terms: # c x Criteria #cxused #cxby #cxexternal #cxauditor #cxto #cxevaluate #cxpublished #cxfinancial
#cxstatements #cxDiff: # c x Easy
Objective: # c x LO #cx1-1
AACSB: # c x Reflective #cxthinking
1.2 # c x #cx Learning #cxObjective #cx1-2
1) Recording, #cxclassifying, #cxand #cxsummarizing #cxeconomic #cxevents #cxin #cxa #cxlogical #cxmanner #cxfor
#cxthe #cxpurpose #cxof #cxproviding #cxfinancial #cxinformation #cxfor #cxdecision #cxmaking #cxis #cxcommonly
#cxcalled
A) finance.
B) auditing.
C) accounting.
D) economics.
#cxAnswer:
# cx C
Terms: # c x Recording, #cxclassifying, #cxand #cxsummarizing #cxeconomic
#cxevents #cxDiff: # c x Easy
Objective: # c x LO #cx1-2
AACSB: # c x Reflective #cxthinking
2) An #cxaccountant
A) must #cxpossess #cxexpertise #cxin #cxthe #cxaccumulation #cxof #cxaudit #cxevidence.
B) must #cxdecide #cxthe #cxnumber #cxand #cxtypes #cxof #cxitems #cxto #cxtest.
C) must #cxhave #cxan #cxunderstanding #cxof #cxthe #cxprinciples #cxand #cxrules #cxthat #cxprovide #cxthe #cxbasis #cxfor
#cxpreparing #cxthe #cxaccounting #cxinformation.
D) must #cxbe #cxa
#cxCPA. #cxAnswer:
# cx C
Terms: # c x Distinguishes #cxauditors #cxfrom
#cxaccountants #cxDiff: # c x Moderate
Objective: # c x LO #cx1-2
AACSB: # c x Reflective #cxthinking
4
Copyright #cx© #cx2017 #cxPearson
#cxEducation, #cxInc.
