Test Bank for Auditing and Assurance Services 17th Edition Arens Questions with Answers

Test Bank for Auditing and Assurance Services 17th
Edition Arens
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Auditing |and |Assurance |Services, |17e |(Arens/Elder/Beasley)
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 |management Communications Observation
Y N N

B)
Oral |statements Written Auditor
|made |by |management |Communications |Observation

N Y Y

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

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

Answer: | C
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,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) economics.
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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