Test Bank for Auditing and Assurance Services 16th Edition – Arens, Elder & Beasley | 2025/2026 Latest Update

[TEST BANK]
b




AUDITING AND b




ASSURANCE
b




SERVICES, 16TH
b b




EDITION BY ARENS,
b b b




ELDER,
b




BEASLEY,HOGAN
b b

,Auditing and Assurance Services, (Arens)
b b b



Chapter 1 The Demand for Audit and Other Assurance Services
b b b b b b b b b b




Learning Objective 1-1 b b




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



A) All companies b



B) Privately held companies b b



C) Public companies b



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



Answer: C
b b



Terms: Sarbanes-Oxley Act
b b



Diff: Easy
b b



Objective: LO 1-1 b b



AACSB: Reflective thinking skills b b b



Topic: SOX
b b




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



A)
b



Oral statements b Written Auditor
made by management
b b Communications
b Observation b b



Y N N

B)
Oral statements b Written Auditor
b made by management
b b Communications
b Observation
b



N Y Y

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



Y Y Y

D)
Oral statements b Written Auditor
b made by management
b b Communications
b Observation
b



N N Y

Answer: C b



Terms: Audit evidence b b



Diff: Moderate
b b



Objective: LO 1-1
b b b



AACSB: Reflective thinking skills b b b




1

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



evidence.
b



Answer: The four types of audit and attestation evidence include:
b b b b b b b b b



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



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



3. Observations by the auditor b b b



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



Terms: Basic types of audit evidence
b b b b b b



Diff: Easy
b b



Objective: LO 1-1 b b



AACSB: Reflective thinking skills
b b b




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



information being audited.
b b b



A) True
B) False
Answer: A
b b



Terms: Criteria which an auditor evaluates information
b b b b b b



Diff: Easy
b b



Objective: LO 1-1 b b



AACSB: Reflective thinking skills
b b b




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



generally accepted auditing standards.
b b b b



A) True
B) False
Answer: B
b b



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



Diff: Easy
b b



Objective: LO 1-1 b b



AACSB: Reflective thinking skills
b b b




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



companies.
b



A) True
B) False
Answer: B
b b



Terms: Sarbanes-Oxley Act
b b



Diff: Easy
b b



Objective: LO 1-1 b b



AACSB: Reflective thinking skills
b b b



Topic: SOX
b b




2

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



and financial reporting.
b b b



A) True
B) False
Answer: A
b b



Terms: Sarbanes-Oxley Act
b b



Diff: Easy
b b



Objective: LO 1-1 b b



AACSB: Reflective thinking skills
b b b



Topic: SOX
b b




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



A) True
B) False
Answer: A
b b



Terms: Competence and independent mental attitude Diff:
b b b b b b



bEasy
Objective: LO 1-1 b b



AACSB: Reflective thinking skills
b b b




b Learning Objective 1-2 b b




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



providing financial information for decision making is commonly called:
b b b b b b b b b



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



Terms: Recording, classifying, and summarizing economic events
b b b b b b



Diff: Easy
b b



Objective: LO 1-2 b b



AACSB: Reflective thinking skills
b b b




2) An accountant:
b



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



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



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



accounting information.
b b



D) must be a CPA. b b b



Answer: C
b b



Terms: Distinguishes auditors from accountants
b b b b



Diff: Moderate
b b



Objective: LO 1-2 b b



AACSB: Reflective thinking skills
b b b




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