Auditing & Assurance Services
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TEST BANK jj jj
Auditing & Assurance Services: A Systematic
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jj Approach, 11th Edition Chapters 1 - 21
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,Auditing & Assurance Services jj jj jj
Chapter 1: An Introduction to Assurance and Financial Statement Auditing
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Chapter 2: The Financial Statement Auditing Environment
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Chapter 3: Audit Planning, Types of Audit Tests, and Materiality
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Chapter 4: Risk Assessment
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Chapter 5: Evidence and Documentation
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Chapter 6: Internal Control in a Financial Statement Audit
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Chapter 7: Auditing Internal Control over Financial Reporting
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Chapter 8: Audit Sampling: An Overview and Application to Tests of Controls
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Chapter 9: Audit Sampling: An Application to Substantive Tests of Account Balances
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Chapter 10: Auditing the Revenue Process
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Chapter 11: Auditing the Purchasing Process
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Chapter 12: Auditing the Human Resource Management Process
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Chapter 13: Auditing the Inventory Management Process
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Chapter 14: Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets,
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and Property, Plant, and Equipment
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Chapter 15: Auditing the Financing/Investing Process: Long-Term Liabilities, Stockholders’
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Equity, and Income Statement Accounts
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Chapter 16: Auditing the Financing/Investing Process: Cash and Investments
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Chapter 17: Completing the Audit Engagement
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Chapter 18: Reports on Audited Financial Statements
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Chapter 19: Professional Conduct, Independence, and Quality Management
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Chapter 20: Legal Liability
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Chapter 21: Assurance, Attestation, and Internal Auditing Services
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,Auditing & Assurance Services jj jj jj
Chapter 01 jj j
An Introduction to Assurance and Financial Statement
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jj Auditing
True / False Questions
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1. Independence standards are required for audits of public companies, but not for
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auditsof private companies.
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True False
2. Decision makers demand reliable information that is provided by accountants.
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True False
3. Information asymmetry seldom occurs. jj jj jj
True False
4. Conflicts of interest often occur between absentee owners and managers.
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True False
5. Auditing services and attestation services are the same.
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True False
6. Auditing is a type of attest service.
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True False
7. Testing all transactions that occurred during the period is cost prohibitive.
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True False
Multiple Choice Questionsjj jj
, Auditing & Assurance Services jj jj jj
8. Why do auditors generally use a sampling approach to evidence gathering?
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A. Auditors are experts and do not need to look at much to know whether the
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financialstatements are correct or not.
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B. Auditors must balance the cost of the audit with the need
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forprecision.
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C. Auditors must limit their exposure to their auditee tojj jj jj jj jj jj jj jj
maintainindependence.
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D. The auditor's relationship with the auditee is generally adversarial, so the auditor
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willnot have access to all of the financial information of the company.
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9. Which of the following statements best describes a relationship between sample size
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andother elements of auditing?
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A. If materiality increases, so will
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thesample size.
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B. If the desired level of assurance increases, sample sizes
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can besmaller.
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C. If materiality decreases, sample size will need
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toincrease.
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D. There is no relationship between sample size and materiality or the desired
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levelof assurance.
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10. Which of the following statements about the study of auditing is NOT true?
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A. The study of auditing can be valuable to future accountants and business
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decisionmakers whether or not they plan to become auditors.
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B. The study of auditing focuses on learning the analytical and logical skills
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necessary toevaluate the relevance and reliability of information.
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C. The study of auditing focuses on learning the rules, techniques, and
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computations required to analyze financial statements.
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D. The study of auditing begins with the understanding of a coherent logical
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framework and techniques useful for gathering and analyzing evidence about others'
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assertions.
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11. The basic purpose of a financial statement audit is to
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A. Detect j
fraud.
B. Examine individual transactions so that the auditor may certify
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as totheir validity.
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C. Provide assurance regarding whether the auditee's financial statements
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arefairly stated.
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D. Assure the consistent application of correct
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accountingprocedures.
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TEST BANK jj jj
Auditing & Assurance Services: A Systematic
jj jj jj jj jj
jj Approach, 11th Edition Chapters 1 - 21
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,Auditing & Assurance Services jj jj jj
Chapter 1: An Introduction to Assurance and Financial Statement Auditing
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Chapter 2: The Financial Statement Auditing Environment
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Chapter 3: Audit Planning, Types of Audit Tests, and Materiality
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Chapter 4: Risk Assessment
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Chapter 5: Evidence and Documentation
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Chapter 6: Internal Control in a Financial Statement Audit
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Chapter 7: Auditing Internal Control over Financial Reporting
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Chapter 8: Audit Sampling: An Overview and Application to Tests of Controls
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Chapter 9: Audit Sampling: An Application to Substantive Tests of Account Balances
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Chapter 10: Auditing the Revenue Process
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Chapter 11: Auditing the Purchasing Process
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Chapter 12: Auditing the Human Resource Management Process
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Chapter 13: Auditing the Inventory Management Process
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Chapter 14: Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets,
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and Property, Plant, and Equipment
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Chapter 15: Auditing the Financing/Investing Process: Long-Term Liabilities, Stockholders’
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Equity, and Income Statement Accounts
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Chapter 16: Auditing the Financing/Investing Process: Cash and Investments
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Chapter 17: Completing the Audit Engagement
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Chapter 18: Reports on Audited Financial Statements
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Chapter 19: Professional Conduct, Independence, and Quality Management
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Chapter 20: Legal Liability
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Chapter 21: Assurance, Attestation, and Internal Auditing Services
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,Auditing & Assurance Services jj jj jj
Chapter 01 jj j
An Introduction to Assurance and Financial Statement
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jj Auditing
True / False Questions
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1. Independence standards are required for audits of public companies, but not for
jj jj jj jj jj jj jj jj jj jj jj
auditsof private companies.
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True False
2. Decision makers demand reliable information that is provided by accountants.
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True False
3. Information asymmetry seldom occurs. jj jj jj
True False
4. Conflicts of interest often occur between absentee owners and managers.
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True False
5. Auditing services and attestation services are the same.
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True False
6. Auditing is a type of attest service.
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True False
7. Testing all transactions that occurred during the period is cost prohibitive.
jj jj jj jj jj jj jj jj jj jj
True False
Multiple Choice Questionsjj jj
, Auditing & Assurance Services jj jj jj
8. Why do auditors generally use a sampling approach to evidence gathering?
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A. Auditors are experts and do not need to look at much to know whether the
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financialstatements are correct or not.
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B. Auditors must balance the cost of the audit with the need
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forprecision.
jj j
C. Auditors must limit their exposure to their auditee tojj jj jj jj jj jj jj jj
maintainindependence.
jj j
D. The auditor's relationship with the auditee is generally adversarial, so the auditor
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willnot have access to all of the financial information of the company.
jj j jj jj jj jj jj jj jj jj jj jj jj
9. Which of the following statements best describes a relationship between sample size
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andother elements of auditing?
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A. If materiality increases, so will
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thesample size.
jj j jj
B. If the desired level of assurance increases, sample sizes
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can besmaller.
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C. If materiality decreases, sample size will need
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toincrease.
jj j
D. There is no relationship between sample size and materiality or the desired
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levelof assurance.
jj j jj
10. Which of the following statements about the study of auditing is NOT true?
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A. The study of auditing can be valuable to future accountants and business
jj jj jj jj jj jj jj jj jj jj jj
decisionmakers whether or not they plan to become auditors.
jj j jj jj jj jj jj jj jj jj
B. The study of auditing focuses on learning the analytical and logical skills
jj jj jj jj jj jj jj jj jj jj jj
necessary toevaluate the relevance and reliability of information.
jj jj j jj jj jj jj jj jj
C. The study of auditing focuses on learning the rules, techniques, and
jj jj jj jj jj jj jj jj jj jj
computations required to analyze financial statements.
jj j jj jj jj jj
D. The study of auditing begins with the understanding of a coherent logical
jj jj jj jj jj jj jj jj jj jj jj
framework and techniques useful for gathering and analyzing evidence about others'
jj jj jj jj jj jj jj jj jj jj jj
assertions.
jj
11. The basic purpose of a financial statement audit is to
jj jj jj jj jj jj jj jj jj
A. Detect j
fraud.
B. Examine individual transactions so that the auditor may certify
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as totheir validity.
jj jj j jj
C. Provide assurance regarding whether the auditee's financial statements
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arefairly stated.
jj j jj
D. Assure the consistent application of correct
jj jj jj jj jj
accountingprocedures.
jj j
