Test Bank For Auditing & Assurance Services: A
Systematic Approach, 12th Edition By William Messier
Jr, Steven Glover
,auditing & assurance services: a systematic approach, 12e (messier) chapter 1
an introduction to assurance and financial statement auditing
1) auditing focuses on rules, techniques, and computations required to prepare and analyze
financial information.
answer: false difficulty:
1 easy
topic: the importance for studying auditing
learning objective: 01-01 understand why studying auditing can be valuable to you whether or
not you plan to become an auditor, and why it is different from studying accounting.
bloom's: remember
aacsb: communication
aicpa: bb legal; fn decision making
2) decision makers demand reliable information that is provided by accountants.
answer: true difficulty: 1
easy
topic: the demand for auditing and assurance
learning objective: 01-02 understand the demand for auditing and be able to explain the desired
characteristics of auditors and audit services through an analogy to a house inspector and a house
inspection service.
bloom's: understand
aacsb: communication
aicpa: fn decision making; bb industry
3) information asymmetry seldom occurs.
answer: false difficulty:
2 medium
topic: the demand for auditing and assurance
learning objective: 01-02 understand the demand for auditing and be able to explain the desired
characteristics of auditors and audit services through an analogy to a house inspector and a house
inspection service.
bloom's: apply
aacsb: communication
aicpa: bb industry; fn reporting
,4) conflicts of interest often occur between absentee owners and managers.
answer: true difficulty: 2
medium
topic: the demand for auditing and assurance
learning objective: 01-02 understand the demand for auditing and be able to explain the desired
characteristics of auditors and audit services through an analogy to a house inspector and a house
inspection service.
bloom's: apply
aacsb: communication
aicpa: bb industry; fn reporting
5) auditing services and attestation services are the same.
answer: false difficulty:
1 easy
topic: auditing, attest, and assurance services defined
learning objective: 01-03 understand the relationships among auditing, attestation, and assurance
services.
bloom's: understand
aacsb: communication
aicpa: bb industry; fn reporting
6) auditing is a type of attest service.
answer: true difficulty: 1
easy
topic: auditing, attest, and assurance services defined
learning objective: 01-03 understand the relationships among auditing, attestation, and assurance
services.; 01-04 know the basic definition of a financial statement audit.
bloom's: understand
aacsb: communication
aicpa: bb industry; fn reporting
7) testing all transactions that occurred during the period is cost prohibitive.
answer: true difficulty: 2
medium topic: the audit
process
learning objective: 01-06 be able to explain why on most audit engagements an auditor tests only
a sample of transactions that occurred.
bloom's: apply
aacsb: communication
aicpa: fn decision making; bb critical thinking
, 8) why do auditors generally use a sampling approach to evidence gathering?
A) auditors are experts and do not need to look at much to know whether the financial
statements are correct or not.
B) auditors must balance the cost of the audit with the need for precision.
C) auditors must limit their exposure to their auditee to maintain independence.
D) the auditor's relationship with the auditee is generally adversarial, so the auditor will not
have access to all of the financial information of the company.
answer: b difficulty:
1 easy
topic: the audit process
learning objective: 01-06 be able to explain why on most audit engagements an auditor tests only
a sample of transactions that occurred.
bloom's: understand
aacsb: communication
aicpa: fn decision making; bb industry
9) which of the following statements best describes a relationship between sample size and other
elements of auditing?
A) if materiality increases, so will the sample size.
B) if the desired level of assurance increases, sample sizes can be smaller.
C) if materiality decreases, sample size will need to increase.
D) there is no relationship between sample size and materiality or the desired level of assurance.
answer: c difficulty:
2 medium
topic: the audit process
learning objective: 01-06 be able to explain why on most audit engagements an auditor tests only
a sample of transactions that occurred.
bloom's: apply
aacsb: analytical thinking
aicpa: bb critical thinking; fn risk analysis
Systematic Approach, 12th Edition By William Messier
Jr, Steven Glover
,auditing & assurance services: a systematic approach, 12e (messier) chapter 1
an introduction to assurance and financial statement auditing
1) auditing focuses on rules, techniques, and computations required to prepare and analyze
financial information.
answer: false difficulty:
1 easy
topic: the importance for studying auditing
learning objective: 01-01 understand why studying auditing can be valuable to you whether or
not you plan to become an auditor, and why it is different from studying accounting.
bloom's: remember
aacsb: communication
aicpa: bb legal; fn decision making
2) decision makers demand reliable information that is provided by accountants.
answer: true difficulty: 1
easy
topic: the demand for auditing and assurance
learning objective: 01-02 understand the demand for auditing and be able to explain the desired
characteristics of auditors and audit services through an analogy to a house inspector and a house
inspection service.
bloom's: understand
aacsb: communication
aicpa: fn decision making; bb industry
3) information asymmetry seldom occurs.
answer: false difficulty:
2 medium
topic: the demand for auditing and assurance
learning objective: 01-02 understand the demand for auditing and be able to explain the desired
characteristics of auditors and audit services through an analogy to a house inspector and a house
inspection service.
bloom's: apply
aacsb: communication
aicpa: bb industry; fn reporting
,4) conflicts of interest often occur between absentee owners and managers.
answer: true difficulty: 2
medium
topic: the demand for auditing and assurance
learning objective: 01-02 understand the demand for auditing and be able to explain the desired
characteristics of auditors and audit services through an analogy to a house inspector and a house
inspection service.
bloom's: apply
aacsb: communication
aicpa: bb industry; fn reporting
5) auditing services and attestation services are the same.
answer: false difficulty:
1 easy
topic: auditing, attest, and assurance services defined
learning objective: 01-03 understand the relationships among auditing, attestation, and assurance
services.
bloom's: understand
aacsb: communication
aicpa: bb industry; fn reporting
6) auditing is a type of attest service.
answer: true difficulty: 1
easy
topic: auditing, attest, and assurance services defined
learning objective: 01-03 understand the relationships among auditing, attestation, and assurance
services.; 01-04 know the basic definition of a financial statement audit.
bloom's: understand
aacsb: communication
aicpa: bb industry; fn reporting
7) testing all transactions that occurred during the period is cost prohibitive.
answer: true difficulty: 2
medium topic: the audit
process
learning objective: 01-06 be able to explain why on most audit engagements an auditor tests only
a sample of transactions that occurred.
bloom's: apply
aacsb: communication
aicpa: fn decision making; bb critical thinking
, 8) why do auditors generally use a sampling approach to evidence gathering?
A) auditors are experts and do not need to look at much to know whether the financial
statements are correct or not.
B) auditors must balance the cost of the audit with the need for precision.
C) auditors must limit their exposure to their auditee to maintain independence.
D) the auditor's relationship with the auditee is generally adversarial, so the auditor will not
have access to all of the financial information of the company.
answer: b difficulty:
1 easy
topic: the audit process
learning objective: 01-06 be able to explain why on most audit engagements an auditor tests only
a sample of transactions that occurred.
bloom's: understand
aacsb: communication
aicpa: fn decision making; bb industry
9) which of the following statements best describes a relationship between sample size and other
elements of auditing?
A) if materiality increases, so will the sample size.
B) if the desired level of assurance increases, sample sizes can be smaller.
C) if materiality decreases, sample size will need to increase.
D) there is no relationship between sample size and materiality or the desired level of assurance.
answer: c difficulty:
2 medium
topic: the audit process
learning objective: 01-06 be able to explain why on most audit engagements an auditor tests only
a sample of transactions that occurred.
bloom's: apply
aacsb: analytical thinking
aicpa: bb critical thinking; fn risk analysis
