Test Bank For Auditing And Assurance Services, 17th Edition by Alvin A Arens

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,Auditing and Assurance Services, 17e (Arens/Elder/Beasley)
c c c c c


Chapter 1 The Demand for Audit and Other Assurance Services
c c c c c c c c c c




Learning Objective 1-1 c c




1) The Sarbanes-Oxley Act applies to which of the following companies?
c c c c c c c c c


A) All companies c


B) Privately held companies c c


C) Public companies c


D) All public companies and privately held companies with assets greater than $500 million
c c c c c c c c c c c c


Answer: C
c c


Terms: Sarbanes-Oxley Act
c c


Diff: Easy
c c


Objective: LO 1-1 c c


AACSB: Reflective thinking skills
c c c


Topic: SOX
c c




2) Which of the following is considered audit evidence?
c c c c c c c


A)
c


Oral statements c Written Auditor
made by management Communications
c c Observation
Y N N

B)
Oral statements c Written Auditor
made by management
c c c c Communications Observatio
c


n
N Y Y

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

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

Answer: C c


Terms: Audit evidence c c


Diff: Moderate
c c


Objective: LO 1-1
c c c


AACSB: Reflective thinking skills c c c




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,3) Evidence is paramount to audit and attestation engagements. List the four basic types of audit
c c c c c c c c c c c c c c


evidence.
c


Answer: The four types of audit and attestation evidence include:
c c c c c c c c c


1. Electronic and documentary data about transactions
c c c c c


2. Written and electronic communications with outsiders
c c c c c


3. Observations by the auditor c c c


4. Oral testimony of the auditee (client)
c c c c c


Terms: Basic types of audit evidence
c c c c c c


Diff: Easy
c c


Objective: LO 1-1 c c


AACSB: Reflective thinking skills
c c c




4) The criteria by which an auditor evaluates the information under audit may vary with the
c c c c c c c c c c c c c c


information being audited.
c c c


A) True
B) False
Answer: A
c c


Terms: Criteria which an auditor evaluates information
c c c c c c


Diff: Easy
c c


Objective: LO 1-1 c c


AACSB: Reflective thinking skills
c c c




5) The criteria used by an external auditor to evaluate published financial statements are known
c c c c c c c c c c c c c


as generally accepted auditing standards.
c c c c c


A) True
B) False
Answer: B
c c


Terms: Criteria used by external auditor to evaluate published financial statements
c c c c c c c c c c


Diff: Easy
c c


Objective: LO 1-1 c c


AACSB: Reflective thinking skills
c c c




6) The Sarbanes-Oxley Act establishes standards related to the audits of privately held
c c c c c c c c c c c


companies.
c


A) True
B) False
Answer: B
c c


Terms: Sarbanes-Oxley Act
c c


Diff: Easy
c c


Objective: LO 1-1 c c


AACSB: Reflective thinking skills
c c c


Topic: SOX
c c




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, 7) The Sarbanes-Oxley Act is widely viewed as having ushered in sweeping changes to auditing
c c c c c c c c c c c c c


and financial reporting.
c c c


A) True
B) False
Answer: A
c c


Terms: Sarbanes-Oxley Act
c c


Diff: Easy
c c


Objective: LO 1-1 c c


AACSB: Reflective thinking skills
c c c


Topic: SOX
c c




8) An auditor must be competent and have an independent mental attitude.
c c c c c c c c c c


A) True
B) False
Answer: A
c c


Terms: Competence and independent mental attitude
c c c c c


Diff: Easy
c c


Objective: LO 1-1 c c


AACSB: Reflective thinking skills
c c c




c Learning Objective 1-2 c c




1) Recording, classifying, and summarizing economic events in a logical manner for the purpose
c c c c c c c c c c c c


of providing financial information for decision making is commonly called:
c c c c c c c c c c


A) finance.
B) auditing.
C) accounting.
D) economics.
Answer: C c


Terms: Recording, classifying, and summarizing economic events
c c c c c c


Diff: Easy
c c


Objective: LO 1-2 c c


AACSB: Reflective thinking skills c c c




2) An accountant:
c


A) must possess expertise in the accumulation of audit evidence.
c c c c c c c c


B) must decide the number and types of items to test.
c c c c c c c c c


C) must have an understanding of the principles and rules that provide the basis for preparing the
c c c c c c c c c c c c c c c


accounting information.
c c


D) must be a CPA. c c c


Answer: C c


Terms: Distinguishes auditors from accountants
c c c c


Diff: Moderate
c c


Objective: LO 1-2 c c


AACSB: Reflective thinking skills c c c




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