Auditing & Assurance Services
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TEST BANK p p
Auditing & Assurance Services: A Systematic
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p Approach, 11th Edition Chapters 1 - 21
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,Auditing & Assurance Services
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Chapter 1: An Introduction to Assurance and Financial Statement Auditing
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Chapter 2: The Financial Statement Auditing Environment
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Chapter 3: Audit Planning, Types of Audit Tests, and Materiality
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Chapter 4: Risk Assessment
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Chapter 5: Evidence and Documentation
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Chapter 6: Internal Control in a Financial Statement Audit
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Chapter 7: Auditing Internal Control over Financial Reporting
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Chapter 8: Audit Sampling: An Overview and Application to Tests of Controls
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Chapter 9: Audit Sampling: An Application to Substantive Tests of Account Balances
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Chapter 10: Auditing the Revenue Process
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Chapter 11: Auditing the Purchasing Process
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Chapter 12: Auditing the Human Resource Management Process
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Chapter 13: Auditing the Inventory Management Process
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Chapter 14: Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets,
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and Property, Plant, and Equipment
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Chapter 15: Auditing the Financing/Investing Process: Long-Term Liabilities, Stockholders’
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Equity, and Income Statement Accounts
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Chapter 16: Auditing the Financing/Investing Process: Cash and Investments
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Chapter 17: Completing the Audit Engagement
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Chapter 18: Reports on Audited Financial Statements
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Chapter 19: Professional Conduct, Independence, and Quality Management
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Chapter 20: Legal Liability
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Chapter 21: Assurance, Attestation, and Internal Auditing Services
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,Auditing & Assurance Services p p p
Chapter 01 p p
An Introduction to Assurance and Financial Statement Auditing
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True / False Questions
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1. Independence standards are required for audits of public companies, but not for
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pauditsof private companies.
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True False
2. Decision makers demand reliable information that is provided by accountants.
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True False
3. Information asymmetry seldom occurs.p p p
True False
4. Conflicts of interest often occur between absentee owners and managers.
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True False
5. Auditing services and attestation services are the same.
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True False
6. Auditing is a type of attest service.
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True False
7. Testing all transactions that occurred during the period is cost prohibitive.
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True False
Multiple Choice Questions
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, Auditing & Assurance Services p p p
8. Why do auditors generally use a sampling approach to evidence gathering?
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A. Auditors are experts and do not need to look at much to know whether the
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financialstatements are correct or not.
p p p p p p
B. Auditors must balance the cost of the audit with the need
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forprecision.
p p
C. Auditors must limit their exposure to their auditee to
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maintainindependence.
p p
D. The auditor's relationship with the auditee is generally adversarial, so the auditor
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willnot have access to all of the financial information of the company.
p p p p p p p p p p p p p
9. Which of the following statements best describes a relationship between sample size
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andother elements of auditing?
p p p p p
A. If materiality increases, so will
p p p p
thesample size.
p p p
B. If the desired level of assurance increases, sample sizes can
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besmaller.
p p
C. If materiality decreases, sample size will need
p p p p p p
toincrease.
p p
D. There is no relationship between sample size and materiality or the desired
p p p p p p p p p p p
levelof assurance.
p p p
10. Which of the following statements about the study of auditing is NOT true?
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A. The study of auditing can be valuable to future accountants and business
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decisionmakers whether or not they plan to become auditors.
p p p p p p p p p p
B. The study of auditing focuses on learning the analytical and logical skills necessary
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toevaluate the relevance and reliability of information.
p p p p p p p p
C. The study of auditing focuses on learning the rules, techniques, and
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computations required to analyze financial statements.
p p p p p p
D. The study of auditing begins with the understanding of a coherent logical
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framework and techniques useful for gathering and analyzing evidence about others'
p p p p p p p p p p p
assertions.
p
11. The basic purpose of a financial statement audit is to
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A. Detect p
fraud.
B. Examine individual transactions so that the auditor may certify as
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totheir validity.
p p p
C. Provide assurance regarding whether the auditee's financial statements
p p p p p p p
arefairly stated.
p p p
D. Assure the consistent application of correct
p p p p p
accountingprocedures.
p p
p p p
TEST BANK p p
Auditing & Assurance Services: A Systematic
p p p p p
p Approach, 11th Edition Chapters 1 - 21
p p p p p p p
,Auditing & Assurance Services
p p p
Chapter 1: An Introduction to Assurance and Financial Statement Auditing
p p p p p p p p p
Chapter 2: The Financial Statement Auditing Environment
p p p p p p
Chapter 3: Audit Planning, Types of Audit Tests, and Materiality
p p p p p p p p p
Chapter 4: Risk Assessment
p p p
Chapter 5: Evidence and Documentation
p p p p
Chapter 6: Internal Control in a Financial Statement Audit
p p p p p p p p
Chapter 7: Auditing Internal Control over Financial Reporting
p p p p p p p
Chapter 8: Audit Sampling: An Overview and Application to Tests of Controls
p p p p p p p p p p p
Chapter 9: Audit Sampling: An Application to Substantive Tests of Account Balances
p p p p p p p p p p p
Chapter 10: Auditing the Revenue Process
p p p p p
Chapter 11: Auditing the Purchasing Process
p p p p p
Chapter 12: Auditing the Human Resource Management Process
p p p p p p p
Chapter 13: Auditing the Inventory Management Process
p p p p p p
Chapter 14: Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets,
p p p p p p p p p
and Property, Plant, and Equipment
p p p p p
Chapter 15: Auditing the Financing/Investing Process: Long-Term Liabilities, Stockholders’
p p p p p p p p
Equity, and Income Statement Accounts
p p p p p
Chapter 16: Auditing the Financing/Investing Process: Cash and Investments
p p p p p p p p
Chapter 17: Completing the Audit Engagement
p p p p p
Chapter 18: Reports on Audited Financial Statements
p p p p p p
Chapter 19: Professional Conduct, Independence, and Quality Management
p p p p p p p
Chapter 20: Legal Liability
p p p
Chapter 21: Assurance, Attestation, and Internal Auditing Services
p p p p p p p
,Auditing & Assurance Services p p p
Chapter 01 p p
An Introduction to Assurance and Financial Statement Auditing
p p p p p p p
True / False Questions
p p p
1. Independence standards are required for audits of public companies, but not for
p p p p p p p p p p p
pauditsof private companies.
p p p
True False
2. Decision makers demand reliable information that is provided by accountants.
p p p p p p p p p
True False
3. Information asymmetry seldom occurs.p p p
True False
4. Conflicts of interest often occur between absentee owners and managers.
p p p p p p p p p
True False
5. Auditing services and attestation services are the same.
p p p p p p p
True False
6. Auditing is a type of attest service.
p p p p p p
True False
7. Testing all transactions that occurred during the period is cost prohibitive.
p p p p p p p p p p
True False
Multiple Choice Questions
p p
, Auditing & Assurance Services p p p
8. Why do auditors generally use a sampling approach to evidence gathering?
p p p p p p p p p p
A. Auditors are experts and do not need to look at much to know whether the
p p p p p p p p p p p p p p
financialstatements are correct or not.
p p p p p p
B. Auditors must balance the cost of the audit with the need
p p p p p p p p p p
forprecision.
p p
C. Auditors must limit their exposure to their auditee to
p p p p p p p p
maintainindependence.
p p
D. The auditor's relationship with the auditee is generally adversarial, so the auditor
p p p p p p p p p p p
willnot have access to all of the financial information of the company.
p p p p p p p p p p p p p
9. Which of the following statements best describes a relationship between sample size
p p p p p p p p p p p
andother elements of auditing?
p p p p p
A. If materiality increases, so will
p p p p
thesample size.
p p p
B. If the desired level of assurance increases, sample sizes can
p p p p p p p p p
besmaller.
p p
C. If materiality decreases, sample size will need
p p p p p p
toincrease.
p p
D. There is no relationship between sample size and materiality or the desired
p p p p p p p p p p p
levelof assurance.
p p p
10. Which of the following statements about the study of auditing is NOT true?
p p p p p p p p p p p p
A. The study of auditing can be valuable to future accountants and business
p p p p p p p p p p p
decisionmakers whether or not they plan to become auditors.
p p p p p p p p p p
B. The study of auditing focuses on learning the analytical and logical skills necessary
p p p p p p p p p p p p
toevaluate the relevance and reliability of information.
p p p p p p p p
C. The study of auditing focuses on learning the rules, techniques, and
p p p p p p p p p p
computations required to analyze financial statements.
p p p p p p
D. The study of auditing begins with the understanding of a coherent logical
p p p p p p p p p p p
framework and techniques useful for gathering and analyzing evidence about others'
p p p p p p p p p p p
assertions.
p
11. The basic purpose of a financial statement audit is to
p p p p p p p p p
A. Detect p
fraud.
B. Examine individual transactions so that the auditor may certify as
p p p p p p p p p
totheir validity.
p p p
C. Provide assurance regarding whether the auditee's financial statements
p p p p p p p
arefairly stated.
p p p
D. Assure the consistent application of correct
p p p p p
accountingprocedures.
p p
