Test Bank: Auditing and Assurance Services, 16th Edition (Arens, Elder, Beasley, Hogan)

STUDOVA




[TEST BANK]
AUDITING AND
ASSURANCE
SERVICES, 16TH
EDITION BY ARENS,
ELDER, BEASLE
[TEST BANK]
AUDITING AND
ASSURANCE
SERVICES, 16TH
EDITION BY ARENS,
ELDER, BEASLE

,STUDOVA




Auditing and Assurance Services, (Arens)
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 Communications Observation
management
Y N N

B)
Oral statements Written Auditor
made by Communications Observation
management
N Y
Y

C)
Oral statements Written Auditor
made by Communications Observation
management
Y Y Y

D)
Oral statements Written Auditor
made by Communications Observation
management
N N Y

Answer: C
Terms: Audit evidence
Diff: Moderate
Objective: LO 1-1
AACSB: Reflective thinking skills

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3) 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 skills

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

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

6) The Sarbanes-Oxley Act establishes standards related to the audits of
privately held companies.
A) True
B) False
Answer:
B
Terms: Sarbanes-Oxley Act
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking skills
Topic: SOX




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7) The Sarbanes-Oxley Act is widely viewed as having ushered in sweeping changes to
auditing and financial reporting.
A) True
B) False
Answer:
A
Terms: Sarbanes-Oxley Act
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking skills
Topic: SOX

8) An auditor must be competent and have an independent mental attitude.
A) True
B) False
Answer:
A
Terms: Competence and independent mental
attitude Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking skills

Learning Objective 1-2

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

2) An accountant:
A) must possess expertise in the accumulation of audit evidence.
B) must decide the number and types of items to test.
C) must have an understanding of the principles and rules that provide the basis for
preparing the accounting information.
D) must be a
CPA. Answer: C
Terms: Distinguishes auditors from
accountants Diff: Moderate
Objective: LO 1-2
AACSB: Reflective thinking skills



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