,DOWNLOAD THE Test Bank for Auditing Practical Approach with DataAnaly
S S S S S S S S S S
tics 2nd Edition Johnson S S S
Johnson Auditing,S2E ChapterS 1
Chapter 1 Introductio S S
n and Overview of Audit
S S S S
and Assurance S
QuestionSType:STrueSorSFalse
1. GAAPSandSIFRSS areSexamplesSofSapplicableSfinancialSreportingSframework.
A. True
B. False
Ans:SA,SLO:S1,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SCommunication,SAICPASFC:SReporting
Solution:STheSapplicableSfinancialSreportingSframeworkSrefersStoStheSsetSofSstandardsSusedSinSpreparingSt
heShistoricalSfinancialSstatements,SsuchSasSGAAP,SIFRSSorSaSFederalSIncomeSTaxSBasisSofSAccounting.
2. ReviewSofSfinancialSforecastsSfallsSunderSattestationSservices.
A. True
B. False
Ans:SA,SLO:S1,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SEthics,SAICPASFC:SMeasurementSAnalysisSandSInter
pretation
Solution:S AttestationSservicesS(underStheSumbrellaS ofS assuranceSservices)SincludeSreviewSofShistoricalSfina
ncialSstatements,SreviewSofSfinancialSforecasts,SandSexaminationSofSinternalScontrol.
3. WithinSaSU.S.Scontext,StheSapplicableSfinancialSreportingSframeworkSisStypicallySG
enerallySAcceptedSAccountingSPrinciplesS(GAAP).
A. True
B. False
Ans:SA,SLO:S2,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SEthics,SAICPASFC:SMeasurementSAnalysisSandSInter
pretation
Solution:SWithinSaSU.S.Scontext,StheSapplicableSfinancialSreportingSframeworkSisStypicallySgenerallyS
acceptedSaccountingSprinciplesS(GAAP).
4. PrivateScompanies,SorSnon-
issuers,SareSnotSrequiredSbyStheSU.S.SgovernmentStoShaveSanSannualSfinancialSstateme
ntSaudit
A. True
B. False
Ans:SA,SLO:S2,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SAnalytic,SAICPASFC:SReporting
CopyrightS©S2022SWILEY TestSBank (ForSInstructorSUseS Only) 1-1
mynursytest.store
,DOWNLOAD THE Test Bank for Auditing Practical Approach with DataAnaly
S S S S S S S S S S
tics 2nd Edition Johnson
S S S
Johnson Auditing,S2E ChapterS1
Solution:SPrivateScompanies,SorSnon-
issuers,SareSnotSrequiredSbyStheSU.S.SgovernmentStoShaveSanSannualSfinancialSstatementSaudit,SbutS
oftenSotherSinterestedSusers,SsuchSasSaSbankSorSlender,SmaySrequestSthatSaSprivateScompanySprovid
eSauditedSfinancialSstatements.
5. OneSofStheSreasonsSthereSisSaSdemandSforSfinancialSstatementSauditsSisSthatSusersSofSfin
ancialSstatementsSoftenSlackSaccountingSandSlegalSknowledgeStoSfullySunderstandScom
plexSaccountingSandSdisclosureSchoices.
A. True
B. False
Ans:SA,SLO:S3,SBloom:SC,SDifficulty:SEasy,SMin:S1,SAACSB:SAnalytic,SAICPASPC:SCommunication
Solution:SFinancialSstatementsSareScomplex,StheSamountsSareSoftenSaffectedSbySsignificantSestimates,San
dStheSdisclosuresSoftenSrequireSsignificantSknowledgeSandSexperienceStoSevaluate.SMostSfinancialSstatem
entSusersSdoSnotShaveStheSaccountingSandSlegalSknowledgeStoSassessStheSreasonablenessSofScomplexSac
countingSandSdisclosureSchoicesSbeingSmadeSbyStheScompany.
6. InSfinancialSaccounting,StheSbalanceSsheetSisSaSstatementSofSfinancialSposition
A. True
B. False
Ans:SA,SLO:S3,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SAnalytic,SAICPASPC:SCommunicationSSolution
:SInSfinancialSaccounting,StheSfinancialSstatementsSincludeStheSbalanceSsheetS (statementSof
financialSposition),SincomeSstatementS(statementSofScomprehensiveSincome),SstatementSofScashSflows,
statementSofSchangesSinSequitySandSaccompanyingSnotes.
7. BusinessSvaluationSfallsSwithinStheSpurviewSofSnon-assuranceSservices.
A. True
B. False
Ans:SA,SLO:S4,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SAnalytic,SAICPASFC:SMeasurementSAnalysisSandSInterpretatio
n
Solution:SManySofStheseSaccountingSfirmsSprovideSnon-assuranceS(orSnon-
audit)SservicesSasSwellSasSassuranceSservices.STheseSnon-
assuranceSservicesSincludeSmanagementSconsulting,SbusinessSvaluation,SmergersSandSacquisitions,Sinsolv
ency,StaxSandSaccountingSservices.
8. SecuritiesSExchangeSActSofS1934SregulatesStheSongoingStradingSofSsecuritiesSafterStheSin
itialSpublicSofferingSandSrequiresStheSannualSauditSofSaSpublicScompany’sSfinancialSstat
ements.
A. True
B. False
Ans:SA,SLO:S5,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SEthics,SAICPASBB:SGovernanceSPerspectiveSSolutio
n:STheSSecuritiesSExchangeSActSofS1934SregulatesStheSongoingStradingSofSsecuritiesSafterSthe
initialSpublicSofferingSandSrequiresStheSannualSauditSofSaSpublicScompany’sSfinancialSstatements.
CopyrightS©S2022SWILEY TestSBank (ForSInstructorSUseS Only) 1-2
mynursytest.store
, DOWNLOAD THE Test Bank for Auditing Practical Approach with DataAnaly
S S S S S S S S S S
tics 2nd Edition JohnsonS S S
Johnson Auditing,S2E ChapterS1
9. TheSSecuritiesSActSofS1933SenhancesSannualSfinancialSdisclosuresSforSpublicSc
ompaniesSandSplacedSmoreSemphasisSonScorporateSresponsibility.
A. True
B. False
Ans:SB,SLO:S5,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SEthics,SAICPASBB:SGovernanceSPerspectiveSSolutio
n:STheSSecuritiesSActSofS1933SregulatesStheSdisclosureSofSfinancialSinformationSinSaScompany’s
initialSpublicSofferingSofSstockSandSrequiresSthatStheSfinancialSinformationSbeSaudited.
10. NeitherSclientScharacteristicsSnorSactionsSofStheSauditorSaffectStheSauditSrisk.
A. True
B. False
Ans:SB,SLO:S6,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SEthics,SAICPASFC:SReportingSSolution
:SAuditSriskSisSaffectedSbySclientScharacteristicsSasSwellSasSactionsSofStheSauditor.
11. MaterialitySisSaSrelativeSconcept,S andSitSdiffersSfromScompanyStoScompanySandSfromSye
arStoSyearSforSaSgivenScompany.
A. True
B. False
Ans:SA,SLO:S6,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SEthics,SAICPASFC:SReporting
Solution:SMaterialitySisSaSrelativeSconcept,SandSitSdiffersSfromScompanyStoScompanySandSfromSyearStoSyea
rSforSaSgivenScompany.SAuditorsSdesignSanSauditStoSprovideSreasonableSassuranceSthatStheSfinancialSstate
mentsSareSfreeSofSmaterialSmisstatement.SHowever,SauditorsSdoS notS designSanSauditStoSlookSforSimmateri
alS misstatementsSbecauseStheySwouldSnotSinfluenceSaSfinancialSstatementSuser.
12. WhenS auditorsS determineS thatS theS financialSstatementsSofSaS publicS companyS areSp
resentedSfairlySinSaccordanceSwithStheSapplicableS financialSreportingSframework,St
heySissueSaS typeSofSreportS thatS PCAOBS standardsS callS “theSstandardScleanSreport.”
A. True
B. False
Ans:SB,SLO:S6,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SEthics,SAICPASFC:SReporting
Solution:S IfS auditorsS haveS determinedStheS financialSstatementsS areS presentedSfairlyS inS accordanceSwithSth
eS applicableS financialSreportingS framework,S theySissueStheS standardS unqualifiedS report.S TheS PCAOBSstand
ardsSuseStheStermS“unqualified”Sreport.
13. InSanSunqualifiedSauditSreportSonStheSfinancialSstatementsSofSaSpublicScompany,StheScon
cludingS statementSofStheS BasisSforS OpinionS paragraphS mentionsS reasonableS basisSforSth
eSauditSfirm’sSopinion.
A. True
B. False
CopyrightS©S2022SWILEY TestSBank (ForSInstructorSUseS Only) 1-3
mynursytest.store
S S S S S S S S S S
tics 2nd Edition Johnson S S S
Johnson Auditing,S2E ChapterS 1
Chapter 1 Introductio S S
n and Overview of Audit
S S S S
and Assurance S
QuestionSType:STrueSorSFalse
1. GAAPSandSIFRSS areSexamplesSofSapplicableSfinancialSreportingSframework.
A. True
B. False
Ans:SA,SLO:S1,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SCommunication,SAICPASFC:SReporting
Solution:STheSapplicableSfinancialSreportingSframeworkSrefersStoStheSsetSofSstandardsSusedSinSpreparingSt
heShistoricalSfinancialSstatements,SsuchSasSGAAP,SIFRSSorSaSFederalSIncomeSTaxSBasisSofSAccounting.
2. ReviewSofSfinancialSforecastsSfallsSunderSattestationSservices.
A. True
B. False
Ans:SA,SLO:S1,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SEthics,SAICPASFC:SMeasurementSAnalysisSandSInter
pretation
Solution:S AttestationSservicesS(underStheSumbrellaS ofS assuranceSservices)SincludeSreviewSofShistoricalSfina
ncialSstatements,SreviewSofSfinancialSforecasts,SandSexaminationSofSinternalScontrol.
3. WithinSaSU.S.Scontext,StheSapplicableSfinancialSreportingSframeworkSisStypicallySG
enerallySAcceptedSAccountingSPrinciplesS(GAAP).
A. True
B. False
Ans:SA,SLO:S2,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SEthics,SAICPASFC:SMeasurementSAnalysisSandSInter
pretation
Solution:SWithinSaSU.S.Scontext,StheSapplicableSfinancialSreportingSframeworkSisStypicallySgenerallyS
acceptedSaccountingSprinciplesS(GAAP).
4. PrivateScompanies,SorSnon-
issuers,SareSnotSrequiredSbyStheSU.S.SgovernmentStoShaveSanSannualSfinancialSstateme
ntSaudit
A. True
B. False
Ans:SA,SLO:S2,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SAnalytic,SAICPASFC:SReporting
CopyrightS©S2022SWILEY TestSBank (ForSInstructorSUseS Only) 1-1
mynursytest.store
,DOWNLOAD THE Test Bank for Auditing Practical Approach with DataAnaly
S S S S S S S S S S
tics 2nd Edition Johnson
S S S
Johnson Auditing,S2E ChapterS1
Solution:SPrivateScompanies,SorSnon-
issuers,SareSnotSrequiredSbyStheSU.S.SgovernmentStoShaveSanSannualSfinancialSstatementSaudit,SbutS
oftenSotherSinterestedSusers,SsuchSasSaSbankSorSlender,SmaySrequestSthatSaSprivateScompanySprovid
eSauditedSfinancialSstatements.
5. OneSofStheSreasonsSthereSisSaSdemandSforSfinancialSstatementSauditsSisSthatSusersSofSfin
ancialSstatementsSoftenSlackSaccountingSandSlegalSknowledgeStoSfullySunderstandScom
plexSaccountingSandSdisclosureSchoices.
A. True
B. False
Ans:SA,SLO:S3,SBloom:SC,SDifficulty:SEasy,SMin:S1,SAACSB:SAnalytic,SAICPASPC:SCommunication
Solution:SFinancialSstatementsSareScomplex,StheSamountsSareSoftenSaffectedSbySsignificantSestimates,San
dStheSdisclosuresSoftenSrequireSsignificantSknowledgeSandSexperienceStoSevaluate.SMostSfinancialSstatem
entSusersSdoSnotShaveStheSaccountingSandSlegalSknowledgeStoSassessStheSreasonablenessSofScomplexSac
countingSandSdisclosureSchoicesSbeingSmadeSbyStheScompany.
6. InSfinancialSaccounting,StheSbalanceSsheetSisSaSstatementSofSfinancialSposition
A. True
B. False
Ans:SA,SLO:S3,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SAnalytic,SAICPASPC:SCommunicationSSolution
:SInSfinancialSaccounting,StheSfinancialSstatementsSincludeStheSbalanceSsheetS (statementSof
financialSposition),SincomeSstatementS(statementSofScomprehensiveSincome),SstatementSofScashSflows,
statementSofSchangesSinSequitySandSaccompanyingSnotes.
7. BusinessSvaluationSfallsSwithinStheSpurviewSofSnon-assuranceSservices.
A. True
B. False
Ans:SA,SLO:S4,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SAnalytic,SAICPASFC:SMeasurementSAnalysisSandSInterpretatio
n
Solution:SManySofStheseSaccountingSfirmsSprovideSnon-assuranceS(orSnon-
audit)SservicesSasSwellSasSassuranceSservices.STheseSnon-
assuranceSservicesSincludeSmanagementSconsulting,SbusinessSvaluation,SmergersSandSacquisitions,Sinsolv
ency,StaxSandSaccountingSservices.
8. SecuritiesSExchangeSActSofS1934SregulatesStheSongoingStradingSofSsecuritiesSafterStheSin
itialSpublicSofferingSandSrequiresStheSannualSauditSofSaSpublicScompany’sSfinancialSstat
ements.
A. True
B. False
Ans:SA,SLO:S5,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SEthics,SAICPASBB:SGovernanceSPerspectiveSSolutio
n:STheSSecuritiesSExchangeSActSofS1934SregulatesStheSongoingStradingSofSsecuritiesSafterSthe
initialSpublicSofferingSandSrequiresStheSannualSauditSofSaSpublicScompany’sSfinancialSstatements.
CopyrightS©S2022SWILEY TestSBank (ForSInstructorSUseS Only) 1-2
mynursytest.store
, DOWNLOAD THE Test Bank for Auditing Practical Approach with DataAnaly
S S S S S S S S S S
tics 2nd Edition JohnsonS S S
Johnson Auditing,S2E ChapterS1
9. TheSSecuritiesSActSofS1933SenhancesSannualSfinancialSdisclosuresSforSpublicSc
ompaniesSandSplacedSmoreSemphasisSonScorporateSresponsibility.
A. True
B. False
Ans:SB,SLO:S5,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SEthics,SAICPASBB:SGovernanceSPerspectiveSSolutio
n:STheSSecuritiesSActSofS1933SregulatesStheSdisclosureSofSfinancialSinformationSinSaScompany’s
initialSpublicSofferingSofSstockSandSrequiresSthatStheSfinancialSinformationSbeSaudited.
10. NeitherSclientScharacteristicsSnorSactionsSofStheSauditorSaffectStheSauditSrisk.
A. True
B. False
Ans:SB,SLO:S6,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SEthics,SAICPASFC:SReportingSSolution
:SAuditSriskSisSaffectedSbySclientScharacteristicsSasSwellSasSactionsSofStheSauditor.
11. MaterialitySisSaSrelativeSconcept,S andSitSdiffersSfromScompanyStoScompanySandSfromSye
arStoSyearSforSaSgivenScompany.
A. True
B. False
Ans:SA,SLO:S6,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SEthics,SAICPASFC:SReporting
Solution:SMaterialitySisSaSrelativeSconcept,SandSitSdiffersSfromScompanyStoScompanySandSfromSyearStoSyea
rSforSaSgivenScompany.SAuditorsSdesignSanSauditStoSprovideSreasonableSassuranceSthatStheSfinancialSstate
mentsSareSfreeSofSmaterialSmisstatement.SHowever,SauditorsSdoS notS designSanSauditStoSlookSforSimmateri
alS misstatementsSbecauseStheySwouldSnotSinfluenceSaSfinancialSstatementSuser.
12. WhenS auditorsS determineS thatS theS financialSstatementsSofSaS publicS companyS areSp
resentedSfairlySinSaccordanceSwithStheSapplicableS financialSreportingSframework,St
heySissueSaS typeSofSreportS thatS PCAOBS standardsS callS “theSstandardScleanSreport.”
A. True
B. False
Ans:SB,SLO:S6,SBloom:SK,SDifficulty:SEasy,SMin:S1,SAACSB:SEthics,SAICPASFC:SReporting
Solution:S IfS auditorsS haveS determinedStheS financialSstatementsS areS presentedSfairlyS inS accordanceSwithSth
eS applicableS financialSreportingS framework,S theySissueStheS standardS unqualifiedS report.S TheS PCAOBSstand
ardsSuseStheStermS“unqualified”Sreport.
13. InSanSunqualifiedSauditSreportSonStheSfinancialSstatementsSofSaSpublicScompany,StheScon
cludingS statementSofStheS BasisSforS OpinionS paragraphS mentionsS reasonableS basisSforSth
eSauditSfirm’sSopinion.
A. True
B. False
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