Test Bank for Auditing: A Practical Approach with Data Analytics, 2nd Edition by Raymond Johnson, Laura Wiley & Colleen Moroney – Verified Chapters 1-16, Complete Newest Version

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TEST BANK
Auditing: A Practical Approach with Data Analytics

Raymond N. Johnson, Laura D. Wiley & Robyn Moroney

2nd Edition

All Chapters Complete (Questions with Rationalized Answers)

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TABLE OF CONTENTS

Chapter1 Introductionand Overviewof Auditand Assurance

Chapter2 Professionalismand Professional Responsibilities

Chapter3 Risk AssessmentPart I: Audit Risk and Audit Strategy

Chapter4 Risk AssessmentPart II: Understandingthe Client

Chapter5 Audit Evidence

Chapter6 Gaining an Understandingof theClient'sSystem ofInternalControl

Chapter7 Risk Response:PerformingTests of Controls


Chapter8 Audit Data Analytics

Chapter9 Risk Response:PerformingSubstantiveProcedures

Chapter10 Risk Response:Audit Sampling for SubstantiveProcedures

Chapter11Auditingthe RevenueProcess

Chapter12Auditingthe Purchasingand Payroll Processes

Chapter13AuditingCash, Inventoryand RelatedIncomeStatementAccounts

Chapter14 AuditingInvestingand Financing Activities

Chapter15Completingthe Audit


Chapter16Reportingon the Audit

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QuestionsType: True or False


Chapter 1 Introduction and Overview of Audit and Assurance


1. GAAP and IFRS are examplesof applicablefinancialreportingframework.
A. True
B. False
Answer: A, Taxonomy:Knowledge,Difficulty: Easy, AICPA FC: Reporting,AACSB: Communication,Learning
Objective:LO1.1,Solution:The applicablefinancialreportingframeworkrefers tothe set of standardsusedin
preparingthe historicalfinancialstatements,such as GAAP, IFRS or a FederalIncomeTax Basis of Accounting.


2. Reviewof financialforecastsfalls under attestationservices.
A. True
B. False
Answer:A, Taxonomy:Knowledge,Difficulty:Easy, AICPA FC: MeasurementAnalysis and Interpretation,
AACSB: Ethics, LearningObjective:LO1.1,Solution:Attestationservices(under theumbrellaof assurance
services)includereview of historicalfinancial statements,
reviewof financialforecasts,and examinationof
internalcontrol.



3. Within a U.S. context,the applicablefinancialreportingframeworkis typicallyGenerallyAccepted
AccountingPrinciples(GAAP).
A. True
B. False
Answer:A, Taxonomy:Knowledge,Difficulty:Easy, AICPA FC: MeasurementAnalysis and Interpretation,
AACSB: Ethics,LearningObjective:LO1.2,Solution:Within a U.S. context,the applicablefinancial reporting
frameworkis typicallygenerallyacceptedaccountingprinciples(GAAP).

4. Privatecompanies,or non-issuers,are not requiredby the U.S. governmentto havean annual
financialstatementaudit
A. True
B. False
Answer:A, Taxonomy:Knowledge,Difficulty:Easy, AICPA FC: Reporting,AACSB: Analytic,Learning Objective:
LO1.2,Solution:Privatecompanies,or non-issuers,are not requiredby the
U.S. governmentto havean annualfinancialstatementaudit,but oftenotherinterestedusers,such as a bank or
lender,may requestthat a privatecompanyprovideauditedfinancialstatements.

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5. One of the reasons there is a demand for financial statementaudits is that users of financial
statementsoften lack accountingand legal knowledgeto fully understandcomplex accounting
and disclosurechoices.
A. True
B. False
Answer:A, Taxonomy:Comprehension,Difficulty: Easy, AICPA PC: Communication,AACSB: Analytic,Learning
Objective:LO1.3,Solution:Complexity:Financialstatementsare complex,the amountsare oftenaffectedby
significantestimates,and the disclosuresoftenrequiresignificantknowledgeand experienceto evaluate.Most
financialstatementusers do not havethe accountingand legal knowledgeto assessthe reasonablenessof
complexaccountingand disclosurechoicesbeing madeby the company.



6. In financialaccounting,the balancesheetis a statementof financialposition
A. True
B. False
Answer:A, Taxonomy:Knowledge,Difficulty:Easy, AICPA PC: Communication,AACSB: Analytic,Learning
Objective:LO1.3,Solution:In financialaccounting,the financialstatementsincludethe balancesheet(statement
of financialposition),incomestatement(statementof comprehensiveincome),statementof cash flows,
statementof changesin equityand accompanyingnotes.



7. Businessvaluationfalls within the purviewof non-assuranceservices.
A. True
B. False
Answer:A, Taxonomy:Knowledge,Difficulty:Easy, AICPA FC: MeasurementAnalysis and Interpretation,
AACSB: Analytic,LearningObjective:LO1.4,Solution:Manyof theseaccountingfirms providenon-assurance(or
non-audit) servicesas well as assuranceservices.Thesenon- assuranceservicesincludemanagement
consulting,businessvaluation,mergersand acquisitions,insolvency,tax and accountingservices.