Auditing and Assurance Services, 16th Edition – Arens, Elder, Beasley, Hogan – Complete Test Bank

[TEST BANK]
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AUDITING AND ert




ASSURANCE
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SERVICES, 16TH
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EDITION BY ARENS,
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ELDER, BEASLEY,
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HOGAN
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,Auditing and Assurance Services, (Arens)
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Chapter 1 The Demand for Audit and Other Assurance Services
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Learning Objective 1-1 ert ert




1) The Sarbanes-Oxley Act applies to which of the following companies?
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A) All companiesert




B) Privately held companies ert ert




C) Public companies ert




D) All public companies and privately held companies with assets greater than $500 million
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Answer: C
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Terms: Sarbanes-Oxley Act
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Diff: Easy
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Objective: LO 1-1 e r t ert




AACSB: Reflective thinkingskills e r t ert ert




Topic: SOX
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2) Which of the following is considered audit evidence?
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A)
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Oral statements ert Written Auditor
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Y N N

B)
Oral statements ert Written Auditor
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N Y Y

C)
Oral statements ert Written Auditor
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Y Y Y

D)
Oral statements ert Written Auditor
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N N Y

Answer: C e r t




Terms: Auditevidence e r t ert




Diff: Moderate
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Objective: LO 1-1
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AACSB: Reflective thinking skills e r t ert ert




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,3) Evidence is paramount to audit and attestation engagements. List the four basic types of audit
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evidence.
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Answer: The four types of audit and attestation evidence include:
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1. Electronic and documentary data about transactions ert ert ert ert ert




2. Written and electronic communications with outsiders
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3. Observations by the auditor ert ert ert




4. Oral testimony of the auditee (client)
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Terms: Basic types of audit evidence
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Diff: Easy
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Objective: LO 1-1 e r t ert




AACSB: Reflective thinking skills e r t ert ert




4) The criteria by which an auditor evaluates the information under audit may vary with the
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information being audited.
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A) True
B) False
Answer:
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A
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Terms: Criteria which an auditor evaluates information
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Diff: Easy
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Objective: LO 1-1 e r t ert




AACSB: Reflective thinking skills e r t ert ert




5) The criteria used by an external auditor to evaluate published financial statements are known as
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generally accepted auditing standards.
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A) True
B) False
Answer:
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B
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Terms: Criteria used by external auditor to evaluate published financial statements
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Diff: Easy
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Objective: LO 1-1 e r t ert




AACSB: Reflective thinking skills e r t ert ert




6) The Sarbanes-Oxley Act establishes standards related to the audits of privately held
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companies.
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A) True
B) False
Answer:
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B
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Terms: Sarbanes-Oxley Act
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Diff: Easy
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Objective: LO 1-1 e r t ert




AACSB: Reflective thinkingskills e r t ert ert




Topic: SOX
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2

, 7) The Sarbanes-Oxley Act is widely viewed as having ushered in sweeping changes to auditing
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and financial reporting.
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A) True
B) False
Answer:
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A
e r t




Terms: Sarbanes-Oxley Act e r t ert




Diff: Easy
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Objective: LO 1-1 e r t ert




AACSB: Reflective thinkingskills e r t ert ert




Topic: SOX
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8) An auditor must be competent and have an independent mental attitude.
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A) True
B) False
Answer:
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A
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Terms: Competence and independent mental attitude
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Diff: Easy
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Objective: LO 1-1 e r t ert




AACSB: Reflective thinkingskills e r t ert ert




ert Learning Objective 1-2 ert ert




1) Recording, classifying, and summarizing economic events in a logical manner for the purpose of
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providing financial information for decision making is commonly called:
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A) finance.
B) auditing.
C) accounting.
D) economics.
Answer: C
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Terms: Recording, classifying, and summarizing economic events
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Diff: Easy
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Objective: LO 1-2 e r t ert




AACSB: Reflective thinking skills e r t ert ert




2) An accountant:
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A) must possess expertise in the accumulation of audit evidence.
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B) must decide the number and types of items to test.
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C) must have an understanding of the principles and rules that provide the basis for preparing the
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accounting information.
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D) mustbeaCPA. ert ert ert




Answer: C
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Terms: Distinguishes auditors from accountants
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Diff: Moderate
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Objective: LO 1-2 e r t ert




AACSB: Reflective thinking skills e r t ert ert




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