Auditing & Assurance Services
TEST BANK
Auditing & Assurance Services: A Systematic
Approach, 11th Edition Chapters 1 - 21
,Auditing & Assurance Services
Chapter l1: lAn lIntroduction lto lAssurance land lFinancial lStatement lAuditing
Chapter l2: lThe lFinancial lStatement lAuditing lEnvironment
Chapter l3: lAudit lPlanning, lTypes lof lAudit lTests, land lMateriality
Chapter l4: lRisk lAssessment
Chapter l5: lEvidence land lDocumentation
Chapter l6: lInternal lControl lin la lFinancial lStatement lAudit
Chapter l7: lAuditing lInternal lControl lover lFinancial lReporting
Chapter l8: lAudit lSampling: lAn lOverview land lApplication lto lTests lof lControls
Chapter l9: lAudit lSampling: lAn lApplication lto lSubstantive lTests lof lAccount lBalances
Chapter l10: lAuditing lthe lRevenue lProcess
Chapter l11: lAuditing lthe lPurchasing lProcess
Chapter l12: lAuditing lthe lHuman lResource lManagement lProcess
Chapter l13: lAuditing lthe lInventory lManagement lProcess
Chapter l14: lAuditing lthe lFinancing/Investing lProcess: lPrepaid lExpenses, lIntangible lAssets,
land lProperty, lPlant, land lEquipment
Chapter l15: lAuditing lthe lFinancing/Investing lProcess: lLong-Term lLiabilities, lStockholders’
lEquity, land lIncome lStatement lAccounts
Chapter l16: lAuditing lthe lFinancing/Investing lProcess: lCash land lInvestments
Chapter l17: lCompleting lthe lAudit lEngagement
Chapter l18: lReports lon lAudited lFinancial lStatements
Chapter l19: lProfessional lConduct, lIndependence, land lQuality lManagement
Chapter l20: lLegal lLiability
Chapter l21: lAssurance, lAttestation, land lInternal lAuditing lServices
,Auditing & Assurance Services
Chapter l 01l
An l Introduction l to l Assurance l and l Financial l Statement l Auditing
True l / l False l Questions
1. Independence l standards l are l required lfor l audits l of l public l companies, l but l not lfor
l auditslof lprivate lcompanies.
True False
2. Decision l makers l demand l reliable l information l that l is l provided l by l accountants.
True False
3. Information l asymmetry l seldom l occurs.
True False
4. Conflicts l of l interest l often l occur l between l absentee l owners l and l managers.
True False
5. Auditing l services l and l attestation l services l are l the l same.
True False
6. Auditing lis la ltype lof lattest lservice.
True False
7. Testing lall ltransactions lthat loccurred lduring lthe lperiod lis lcost lprohibitive.
True False
Multiple lChoice l Questions
, Auditing & Assurance Services
8. Why ldo lauditors lgenerally luse la lsampling lapproach lto levidence lgathering?
A. Auditors l are lexperts l and ldo lnot lneed lto llook lat lmuch lto lknow lwhether lthe
lfinancialls tatements lare lcorrect lor lnot.
B. Auditors lmust lbalance lthe lcost lof lthe laudit lwith lthe lneed
lforlprecision.
C. Auditors lmust llimit ltheir lexposure lto ltheir lauditee lto
lmaintainlindependence.
D. The lauditor's lrelationship lwith lthe lauditee lis lgenerally ladversarial, lso lthe lauditor
l willlnot lhave laccess lto lall lof lthe lfinancial linformation lof lthe lcompany.
9. Which l of l the l following l statements l best l describes l a l relationship l between l sample l size
l andlother lelements lof lauditing?
A. If l materiality l increases, l so l will
l thelsample l size.
B. If l the l desired l level l of l assurance l increases, l sample l sizes l can
l bels maller.
C. If lmateriality ldecreases, lsample lsize lwill lneed
ltolincrease.
D. There lis lno lrelationship l between lsample lsize l and lmateriality lor lthe ldesired
llevellof lassurance.
10. Which l of lthe l following l statements l about l the l study l of l auditing l is lNOT ltrue?
A. The l study l of l auditing l can l be l valuable l to l future l accountants l and l business
l decisionlm akers lwhether lor lnot lthey lplan lto lbecome lauditors.
B. The l study l of l auditing l focuses l on l learning l the l analytical l and l logical l skills l necessary
l tolevaluate lthe lrelevance land lreliability lof linformation.
C. The l study l of l auditing l focuses l on l learning l the l rules, l techniques, l and
l computations lrequired lto lanalyze lfinancial lstatements.
D. The l study l of l auditing l begins l with lthe l understanding l of l a lcoherent l logical
l framework land ltechniques luseful lfor lgathering land lanalyzing levidence labout lothers'
lassertions.
11. The lbasic lpurpose lof la lfinancial lstatement laudit lis lto
A. Detect
lfraud.
B. Examine l individual l transactions l so l that l the l auditor l may l certify l as
l toltheir lvalidity.
C. Provide l assurance l regarding l whether l the l auditee's l financial l statements
l arelfairly lstated.
D. Assure l the l consistent l application l of l correct
l accountinglprocedures.
TEST BANK
Auditing & Assurance Services: A Systematic
Approach, 11th Edition Chapters 1 - 21
,Auditing & Assurance Services
Chapter l1: lAn lIntroduction lto lAssurance land lFinancial lStatement lAuditing
Chapter l2: lThe lFinancial lStatement lAuditing lEnvironment
Chapter l3: lAudit lPlanning, lTypes lof lAudit lTests, land lMateriality
Chapter l4: lRisk lAssessment
Chapter l5: lEvidence land lDocumentation
Chapter l6: lInternal lControl lin la lFinancial lStatement lAudit
Chapter l7: lAuditing lInternal lControl lover lFinancial lReporting
Chapter l8: lAudit lSampling: lAn lOverview land lApplication lto lTests lof lControls
Chapter l9: lAudit lSampling: lAn lApplication lto lSubstantive lTests lof lAccount lBalances
Chapter l10: lAuditing lthe lRevenue lProcess
Chapter l11: lAuditing lthe lPurchasing lProcess
Chapter l12: lAuditing lthe lHuman lResource lManagement lProcess
Chapter l13: lAuditing lthe lInventory lManagement lProcess
Chapter l14: lAuditing lthe lFinancing/Investing lProcess: lPrepaid lExpenses, lIntangible lAssets,
land lProperty, lPlant, land lEquipment
Chapter l15: lAuditing lthe lFinancing/Investing lProcess: lLong-Term lLiabilities, lStockholders’
lEquity, land lIncome lStatement lAccounts
Chapter l16: lAuditing lthe lFinancing/Investing lProcess: lCash land lInvestments
Chapter l17: lCompleting lthe lAudit lEngagement
Chapter l18: lReports lon lAudited lFinancial lStatements
Chapter l19: lProfessional lConduct, lIndependence, land lQuality lManagement
Chapter l20: lLegal lLiability
Chapter l21: lAssurance, lAttestation, land lInternal lAuditing lServices
,Auditing & Assurance Services
Chapter l 01l
An l Introduction l to l Assurance l and l Financial l Statement l Auditing
True l / l False l Questions
1. Independence l standards l are l required lfor l audits l of l public l companies, l but l not lfor
l auditslof lprivate lcompanies.
True False
2. Decision l makers l demand l reliable l information l that l is l provided l by l accountants.
True False
3. Information l asymmetry l seldom l occurs.
True False
4. Conflicts l of l interest l often l occur l between l absentee l owners l and l managers.
True False
5. Auditing l services l and l attestation l services l are l the l same.
True False
6. Auditing lis la ltype lof lattest lservice.
True False
7. Testing lall ltransactions lthat loccurred lduring lthe lperiod lis lcost lprohibitive.
True False
Multiple lChoice l Questions
, Auditing & Assurance Services
8. Why ldo lauditors lgenerally luse la lsampling lapproach lto levidence lgathering?
A. Auditors l are lexperts l and ldo lnot lneed lto llook lat lmuch lto lknow lwhether lthe
lfinancialls tatements lare lcorrect lor lnot.
B. Auditors lmust lbalance lthe lcost lof lthe laudit lwith lthe lneed
lforlprecision.
C. Auditors lmust llimit ltheir lexposure lto ltheir lauditee lto
lmaintainlindependence.
D. The lauditor's lrelationship lwith lthe lauditee lis lgenerally ladversarial, lso lthe lauditor
l willlnot lhave laccess lto lall lof lthe lfinancial linformation lof lthe lcompany.
9. Which l of l the l following l statements l best l describes l a l relationship l between l sample l size
l andlother lelements lof lauditing?
A. If l materiality l increases, l so l will
l thelsample l size.
B. If l the l desired l level l of l assurance l increases, l sample l sizes l can
l bels maller.
C. If lmateriality ldecreases, lsample lsize lwill lneed
ltolincrease.
D. There lis lno lrelationship l between lsample lsize l and lmateriality lor lthe ldesired
llevellof lassurance.
10. Which l of lthe l following l statements l about l the l study l of l auditing l is lNOT ltrue?
A. The l study l of l auditing l can l be l valuable l to l future l accountants l and l business
l decisionlm akers lwhether lor lnot lthey lplan lto lbecome lauditors.
B. The l study l of l auditing l focuses l on l learning l the l analytical l and l logical l skills l necessary
l tolevaluate lthe lrelevance land lreliability lof linformation.
C. The l study l of l auditing l focuses l on l learning l the l rules, l techniques, l and
l computations lrequired lto lanalyze lfinancial lstatements.
D. The l study l of l auditing l begins l with lthe l understanding l of l a lcoherent l logical
l framework land ltechniques luseful lfor lgathering land lanalyzing levidence labout lothers'
lassertions.
11. The lbasic lpurpose lof la lfinancial lstatement laudit lis lto
A. Detect
lfraud.
B. Examine l individual l transactions l so l that l the l auditor l may l certify l as
l toltheir lvalidity.
C. Provide l assurance l regarding l whether l the l auditee's l financial l statements
l arelfairly lstated.
D. Assure l the l consistent l application l of l correct
l accountinglprocedures.
