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)
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Chapter 1 The Demand for Audit and Other Assurance Services
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Learning Objective 1-1 nh nh




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


B) Privately held companies nh nh


C) Public companies nh


D) All public companies and privately held companies with assets greater than $500
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million Answer: C
Terms: Sarbanes- nh


Oxley Act Diff: Easy
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Objective: LO 1-1 n h nh


AACSB: Reflective thinking skills To
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pic: SOXn h




2) Which of the following is considered audit evidence
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? A)
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Oral statements nhWritten Auditor
made by management Communications
nh nh Observation
Y N N

B)
Oral statements m nh nh Written Com nh Auditor nh


ade by management
nh nh munications Observation
N Y Y

C)
Oral statements nh Written Auditor
made by managementnh nh Communications Observation
Y Y Y

D)
Oral statements nh Written Auditor
made by managementnh nh Communications Observation
N N Y

Answer: C
Terms: Audit evidence nh nh nh


Diff: Moderate Objectiv
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e: LO 1-1
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AACSB: Reflective thinking skillsn h nh nh




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


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 n h nh


AACSB: Reflective thinking skillsn h nh nh




4) The criteria by which an auditor evaluates the information under audit may vary with t
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he information being audited.
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A) True
B) False A nh


nswer: A
Terms: Criteria which an auditor evaluates information
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Diff: Easy n h


Objective: LO 1-1 n h nh


AACSB: Reflective thinking skillsn h nh nh




5) The criteria used by an external auditor to evaluate published financial statements are kno
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wn as generally accepted auditing standards.
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A) True
B) False A nh


nswer: B
Terms: Criteria used by external auditor to evaluate published financial statements
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Diff: Easy n h


Objective: LO 1-1 n h nh


AACSB: Reflective thinking skillsn h nh nh




6) The Sarbanes- nh


Oxley Act establishes standards related to the audits of privately held companies.
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A) True
B) False A nh


nswer: B
Terms: Sarbanes- nh


Oxley Act Diff: Easy
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Objective: LO 1-1 n h nh


AACSB: Reflective thinking skills To
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pic: SOX n h




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, 7) The Sarbanes- nh


Oxley Act is widely viewed as having ushered in sweeping changes to auditing and financial
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reporting.
A) True
B) False A nh


nswer: A
Terms: Sarbanes- nh


Oxley Act Diff: Easy nh nh n h


Objective: LO 1-1 n h nh


AACSB: Reflective thinking skills To nh nh nh nh


pic: SOX n h




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


nswer: A
Terms: Competence and independent mental attitude D
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iff: Easy n h


Objective: LO 1-1 n h nh


AACSB: Reflective thinking skills Le nh nh nh nh




arning Objective 1-2 nh nh




1) Recording, classifying, and summarizing economic events in a logical manner for the purpo
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se of providing financial information for decision making is commonly called:
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A) finance.
B) auditing.
C) accounting.
D) economics.
Answer: C
Terms: Recording, classifying, and summarizing economic events
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Diff: Easy n h


Objective: LO 1-2 n h nh


AACSB: Reflective thinking skills n h nh nh




2) An accountant: nh


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 t
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he accounting information.
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D) must be a CPA nh nh nh


.
Answer: C
Terms: Distinguishes auditors from accountants
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Diff: Moderate
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Objective: LO 1-2 n h nh


AACSB: Reflective thinking skills n h nh nh




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