Test Bank with Verified Answers – Auditing: A Risk-Based Approach to Conducting a Quality Audit (10th Edition) By Johnstone | All Chapters Covered | Rated A+ | Latest Edition

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Chapter 1 - Auditing: Integral to the Economy
1. The need for assurance services arises because the interests of the users of information may be different from
that of the interests of those responsible for providing information.
a. True
b. False
ANSWER: True
POINTS: 1
NATIONAL STANDARDS: United States - BUSPORG: Analytic
STATE STANDARDS: United States - AK - AICPA BB-Critical thinking
TOPICS: Demand for Assurances

2. A financial statement audit is a systematic process of objectively obtaining and evaluating evidence.
a. True
b. False
ANSWER: True
POINTS: 1




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NATIONAL STANDARDS: United States - BUSPORG: Analytic
STATE STANDARDS: United States - AK - AICPA BB-Critical thinking
TOPICS: Auditing Defined

3. Auditors should conduct their work with an attitude of professional skepticism.
a. True
b. False
ANSWER: True
POINTS: 1
NATIONAL STANDARDS: United States - BUSPORG: Analytic
STATE STANDARDS: United States - AK - AICPA BB-Critical thinking
TOPICS: Auditing Defined

4. A bank using Milton Company's financial statements to determine the creditworthiness of a potential loan to
Milton is a good example of the need for unbiased reporting.
a. True
b. False
ANSWER: True
POINTS: 1
NATIONAL STANDARDS: United States - BUSPORG: Analytic
STATE STANDARDS: United States - AK - AICPA BB-Critical thinking
TOPICS: Auditing Defined

5. An integrated audit requires the auditor to assess the effectiveness of internal controls.
a. True
b. False
ANSWER: True
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Chapter 1 - Auditing: Integral to the Economy
POINTS: 1
NATIONAL STANDARDS: United States - BUSPORG: Analytic
STATE STANDARDS: United States - AK - AICPA BB-Critical thinking
TOPICS: Auditing Defined

6. In all states, a CPA must have completed at least 150 hours of college semester hours to receive their license.
a. True
b. False
ANSWER: False
POINTS: 1
NATIONAL STANDARDS: United States - BUSPORG: Analytic
STATE STANDARDS: United States - AK - AICPA BB-Critical thinking
TOPICS: Professional and Regulatory Organizations

7. The Center for Audit Quality was started by the International Federation of Accountants.




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a. True
b. False
ANSWER: False
POINTS: 1
NATIONAL STANDARDS: United States - BUSPORG: Analytic
STATE STANDARDS: United States - AK - AICPA BB-Critical thinking
TOPICS: Professional and Regulatory Organizations

8. The Center for Audit Quality has the primary authority to set auditing standards.
a. True
b. False
ANSWER: False
POINTS: 1
NATIONAL STANDARDS: United States - BUSPORG: Analytic
STATE STANDARDS: United States - AK - AICPA BB-Critical thinking
TOPICS: Professional and Regulatory Organizations

9. In an audit, management is considered the “client”.
a. True
b. False
ANSWER: False
POINTS: 1
NATIONAL STANDARDS: United States - BUSPORG: Analytic
STATE STANDARDS: United States - AK - AICPA BB-Critical thinking
TOPICS: Auditing Defined

10. Auditing is the process of attesting to assertions about economic actions and events.
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Chapter 1 - Auditing: Integral to the Economy
a. True
b. False
ANSWER: True
POINTS: 1
NATIONAL STANDARDS: United States - BUSPORG: Analytic
STATE STANDARDS: United States - AK - AICPA BB-Critical thinking
TOPICS: Auditing Defined

11. Auditing is the process of verifying the accuracy of the financial statements.
a. True
b. False
ANSWER: False
POINTS: 1
NATIONAL STANDARDS: United States - BUSPORG: Analytic
STATE STANDARDS: United States - AK - AICPA BB-Critical thinking




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TOPICS: Auditing Defined

12. Management may have incentive to bias financial information, but the various users of the statements are
not likely to have conflicting interests in the financial information.
a. True
b. False
ANSWER: False
POINTS: 1
LEARNING OBJECTIVES: AUDT.JOHN.16.01-01 - LO: 01-01
NATIONAL STANDARDS: United States - BUSPORG: Analytic
STATE STANDARDS: United States - AK - AICPA BB-Critical thinking
TOPICS: Overview of the External Auditing Profession

13. Auditing exists because users need unbiased information on which to assess management performance and
make economic decisions.
a. True
b. False
ANSWER: True
POINTS: 1
NATIONAL STANDARDS: United States - BUSPORG: Analytic
STATE STANDARDS: United States - AK - AICPA BB-Critical thinking
TOPICS: Auditing Defined

14. A free market can only exist if there is sharing of perfectly reliable information.
a. True
b. False
ANSWER: False
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