TEST BANK] AUDITING AND ASSURANCE SERVICES, 16TH EDITION BY ARENS, ELDER, BEASLEY, HOGAN

[TEST BANK]
AUDITING AND
ASSURANCE
SERVICES, 16TH
EDITION BY
ARENS, ELDER,
BEASLEY, HOGAN

,Auditing and Assurance Services, (Arens)
Chapter 1 The Demand for Audit and Other Assurance Services

Learning Objective 1-1

1) The Sarbanes-Oxley Act applies to which of the following companies?
A) All companies
B) Privately held companies
C) Public companies
D) All public companies and privately held companies with assets greater than $500
million Answer: C
Terms: Sarbanes-Oxley Act
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking skills
Topic: SOX

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

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

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

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

Answer: C
Terms: Audit evidence
Diff: Moderate
Objective: LO 1-1
AACSB: Reflective thinking skills
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,3) Evidence is paramount to audit and attestation engagements. List the four basic types
of audit evidence.
Answer: The four types of audit and attestation evidence include:
1. Electronic and documentary data about transactions
2. Written and electronic communications with outsiders
3. Observations by the auditor
4. Oral testimony of the auditee
(client) Terms: Basic types of
audit evidence Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking skills

4) The criteria by which an auditor evaluates the information under audit may vary
with the information being audited.
A) True
B) False
Answer:
A
Terms: Criteria which an auditor evaluates
information Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking skills

5) The criteria used by an external auditor to evaluate published financial statements are
known as generally accepted auditing standards.
A) True
B) False
Answer:
B
Terms: Criteria used by external auditor to evaluate published financial
statements Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking skills

6) The Sarbanes-Oxley Act establishes standards related to the audits of privately
held companies.
A) True
B) False
Answer:
B
Terms: Sarbanes-Oxley Act
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking skills
Topic: SOX



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, 7) The/ Sarbanes-
Oxley/ Act/ is/ widely/ viewed/ as/ having/ ushered/ in/ sweeping/ changes/ to/auditing/ and/ finan
cial/ reporting.
A) True
B) False/
Answer:
A
Terms: Sarbanes-
Oxley/Act/Diff: Easy
Objective: LO/ 1-1
AACSB:
Reflective/thinking/skills/T
opic: SOX

8) An/ auditor/ must/ be/ competent/ and/ have/ an/ independent/ mental/ attitude.
A) True
B) False/
Answer:
A
Terms:
Competence/ and/ independent/ mental/ attitude/D
iff: Easy
Objective: LO/ 1-1
AACSB:

Reflective/thinking/skills/

Learning/ Objective/ 1-2

1) Recording,/ classifying,/ and/ summarizing/ economic/ events/ in/ a/ logical/ manner/ for/ the/p
urpose/ of/ providing/ financial/ information/ for/ decision/ making/ is/ commonly/ called:
A) finance.
B) auditing.
C) accounting.
D) economics.
/Answer: C
Terms:
Recording,/ classifying,/ and/ summarizing/ economic/
events/ Diff: Easy
Objective: LO/ 1-2
AACSB: Reflective/ thinking/ skills

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