Test Bank for Auditing and Assurance Services, 16th Edition By Alvin A. Arens, Randal J. Elder, Mark S. Beasley, Chris E. Hogan| All Chapters| ISBN: 9780134065823

ss




[TEST BANK]
ss




AUDITING AND
ss ss




ASSURANCE
ss




SERVICES, 16TH
ss ss




EDITION BY
ss ss




ARENS, ELDER,
ss ss




BEASLEY,HOGAN
ss s

, Stuvia.com - The Marketplace to Buy and Sell your Study
ss ss ss ss ss ss ss ss ss


Material




Auditing and Assurance Services,
ss(Arens) ss ss



Chapter 1 The Demand for Audit and Other Assurance Services
ss s s s s ss ss ss ss ss ss ss




Learning Objective 1-1 ss ss




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



A) All companiesss



B) Privately held companies ss ss



C) Public companies ss



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



Answer: C
ss s s



Terms: Sarbanes-Oxley Act
ss ss



Diff: Easy
ss s s



Objective: LO 1-1 s s ss



AACSB: Reflective thinking skills ss ss ss



Topic: SOX
ss s s




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



A)
ss



Oral statements ss Written Auditor
made bymanagement
ss Communications
s Observation
Y N N

B)
Oral statements ss Written Auditor
ss made bymanagement
ss s Communications
ss ss Observation
N Y Y

C)
Oral statements ss Written Auditor
made bymanagement
ss s Communications Observation
Y Y Y

D)
Oral statements ss Written Auditor
ss made bymanagement
ss s Communications
ss ss Observation
N N Y

Answer: C s s



Terms: Audit evidencess ss



Diff: Moderate
ss s s



Objective: LO 1-1
ss s s ss



AACSB: Reflective thinking skills s s ss ss




1

, Stuvia.com - The Marketplace to Buy and Sell your Study ss ss ss ss ss ss ss ss ss


Material




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



evidence.
ss



Answer: The four types of audit and attestation evidence include:
s s ss ss ss ss ss ss ss ss



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



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



3. Observations by the auditor ss ss ss



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



Terms: Basic types of audit evidence
ss s s ss ss ss ss



Diff: Easy
ss s s



Objective: LO 1-1 s s ss



AACSB: Reflective thinking skills
s s ss ss




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



information being audited.
ss ss ss



A) True
B) False
Answer: A
ss ss



Terms: Criteria which an auditor evaluates information
s s ss ss ss ss ss



Diff: Easy
ss s s



Objective: LO 1-1 s s ss



AACSB: Reflective thinking skills
s s ss ss




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



as generally accepted auditing standards.
ss ss ss ss ss



A) True
B) False
Answer: B
ss ss



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



Diff: Easy
ss s s



Objective: LO 1-1 s s ss



AACSB: Reflective thinking skills
s s ss ss




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



companies.
ss



A) True
B) False
Answer: B
ss ss



Terms: Sarbanes-Oxley Act
ss ss



Diff: Easy
ss s s



Objective: LO 1-1 s s ss



AACSB: Reflective thinking skills
ss ss ss



Topic: SOX
ss s s




2

, Stuvia.com - The Marketplace to Buy and Sell your Study ss ss ss ss ss ss ss ss ss


Material




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



and financial reporting.
ss ss ss



A) True
B) False
Answer: A
ss ss



Terms: Sarbanes-Oxley Act ss ss



Diff: Easy
ss s s



Objective: LO 1-1 s s ss



AACSB: Reflective thinking skills ss ss ss



Topic: SOX
ss s s




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



A) True
B) False
Answer: A
ss ss



Terms: Competence and independent mental attitude
s s ss ss ss ss



Diff: Easy
ss s s



Objective: LO 1-1 s s ss



AACSB: Reflective thinking skills ss ss ss




ss Learning Objective 1-2 ss ss




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



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



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



Terms: Recording, classifying, and summarizing economic events
s s ss ss ss ss ss



Diff: Easy
ss s s



Objective: LO 1-2 s s ss



AACSB: Reflective thinking skills s s ss ss




2) An accountant:ss



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



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



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



accounting information.
ss ss



D) must be a CPA. ss ss ss



Answer: C s s



Terms: Distinguishes auditors from accountants
s s ss ss ss



Diff: Moderate
ss s s



Objective: LO 1-2 s s ss



AACSB: Reflective thinking skills s s ss ss




3