Test Bank For Auditing And Assurance Services ,17th Edition, Alvin A Arens, Randal J Elder, Mark S Beasley, Chris E Hogan: ISBN-X ISBN-, A+ guide.

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,Auditing and Assurance Services, 17e (Arens/Elder/Beasley)
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Chapter 1 The Demand for Audit and Other Assurance Services
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Learning Objective 1-1 g g




1) The Sarbanes-Oxley Act applies to which of the following companies?
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A) All companiesg


B) Privately held companies g g


C) Public companies g


D) All public companies and privately held companies with assets greater than $500 million
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Answer: C
g g


Terms: Sarbanes-Oxley Act
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Diff: Easy
g g


Objective: LO 1-1 g g


AACSB: Reflective thinking skills
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Topic: SOX
g g




2) Which of the following is considered audit evidence?
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A)
g


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

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


n
N Y Y

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

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

Answer: C g


Terms: Audit evidence
g g


Diff: Moderate
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Objective: LO 1-1
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AACSB: Reflective thinking skills
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,3) Evidence is paramount to audit and attestation engagements. List the four basic types of audit
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evidence.
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Answer: The four types of audit and attestation evidence include:
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1. Electronic and documentary data about transactions
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2. Written and electronic communications with outsiders
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3. Observations by the auditor g g g


4. Oral testimony of the auditee (client)
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Terms: Basic types of audit evidence
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Diff: Easy
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Objective: LO 1-1 g g


AACSB: Reflective thinking skills
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4) The criteria by which an auditor evaluates the information under audit may vary with the
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information being audited.
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A) True
B) False
Answer:
g


A
g


Terms: Criteria which an auditor evaluates information
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Diff: Easy
g g


Objective: LO 1-1 g g


AACSB: Reflective thinking skills
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5) The criteria used by an external auditor to evaluate published financial statements are known
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as generally accepted auditing standards.
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A) True
B) False
Answer:
g


B
g


Terms: Criteria used by external auditor to evaluate published financial statements
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Diff: Easy
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Objective: LO 1-1 g g


AACSB: Reflective thinking skills
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6) The Sarbanes-Oxley Act establishes standards related to the audits of privately held
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companies.
g


A) True
B) False
Answer:
g


B
g


Terms: Sarbanes-Oxley Act
g g


Diff: Easy
g g


Objective: LO 1-1 g g


AACSB: Reflective thinking skills
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Topic: SOX
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, 7) The Sarbanes-Oxley Act is widely viewed as having ushered in sweeping changes to auditing
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and financial reporting.
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A) True
B) False
Answer:
g


A
g


Terms: Sarbanes-Oxley Act
g g


Diff: Easy
g g


Objective: LO 1-1 g g


AACSB: Reflective thinking skills
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Topic: SOX
g g




8) An auditor must be competent and have an independent mental attitude.
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A) True
B) False
Answer:
g


A
g


Terms: Competence and independent mental attitude
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Diff: Easy
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Objective: LO 1-1 g g


AACSB: Reflective thinking skills
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g Learning Objective 1-2 g g




1) Recording, classifying, and summarizing economic events in a logical manner for the purpose
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of providing financial information for decision making is commonly called:
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A) finance.
B) auditing.
C) accounting.
D) economics.
Answer: C g


Terms: Recording, classifying, and summarizing economic events
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Diff: Easy
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Objective: LO 1-2 g g


AACSB: Reflective thinking skills g g g




2) An accountant:
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A) must possess expertise in the accumulation of audit evidence.
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B) must decide the number and types of items to test.
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C) must have an understanding of the principles and rules that provide the basis for preparing the
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accounting information.
g g


D) must be a CPA. g g g


Answer: C g


Terms: Distinguishes auditors from accountants
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Diff: Moderate
g g


Objective: LO 1-2 g g


AACSB: Reflective thinking skills g g g




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