THE Test Bank for Auditing and Assurance Services 16th Edition Arens All Chapters Included

,DOWNLOAD THE Test Bank for Auditing and Assurance Services 16th Edition Arens
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Auditing and Assurance Services, 16e (Arens/Elder/Beasley)
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Chapter 2 The CPA Profession
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2.1 Learning Objective 2-1 m m




1) The legal right to perform audits is granted to a CPA firm by regulation of
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A) each state. m




B) the Financial Accounting Standards Board (FASB).
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C) the American Institute of Certified Public Accountants (AICPA).
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D) the Auditing Standards Board.
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Answer: A
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Terms: Legal rights to perform audits
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Diff: Moderate
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Objective: LO 2-1 m m




AACSB: Reflective thinking m m




2) Which of the following is not a characteristic of a small firm?
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A) Most small firms have fewer than 25 professionals.
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B) Small firms perform audits on small and not-for-profit businesses.
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C) Tax services are more important than auditing services to the small firm.
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D) Small firms are prohibited by the SEC from auditing publicly traded companies.
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Answer: D
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Terms: Characteristics of a small firm
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Diff: Moderate
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Objective: LO 2-1 m m




AACSB: Reflective thinking m m




3) Sarbanes-Oxley and the Securities and Exchange Commission restrict auditors from providing m m m m m m m m m m




many consulting services to their publicly traded audit clients. Which of the following is true for
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auditors of publicly traded companies?
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I. They are restricted from providing consulting services to privately held companies.
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II. There is no restriction on providing consulting services to non-audit clients.
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A) I only
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B) II only m




C) I and II
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D) Neither I nor II m m m




Answer: B
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Terms: Sarbanes-Oxley and Securities Exchange Commission restrictions
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Diff: Moderate
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Objective: LO 2-1 m m




AACSB: Reflective thinking m m




Topic: SOX
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1
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4) Which of the following does not describe a size category for a CPA firm?
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A) Big Four national firms
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B) Big Four international firms
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C) local firms m




D) national and regional firms m m m




Answer: A
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Terms: Three categories for describing size of audit firms
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Diff: Easy
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Objective: LO 2-1 m m




AACSB: Reflective thinking m m




5) is one of the Big Four international CPA firms. m m m m m m m m




A) Deloitte
B) KPMG
C) Ernst & Young m m




D) All of the above are classified as Big Four international CPA firms.
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Answer: D
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Terms: Three categories for describing size of audit firms
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Diff: Moderate
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Objective: LO 2-1 m m




AACSB: Reflective thinking m m




6) In which type of service does the CPA assemble the financial statements but provide no
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assurance to third parties?
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A) audit
B) compilation
C) review
D) bookkeeping
Answer: B
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Terms: Compilation m




Diff: Moderate
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Objective: LO 2-1
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AACSB: Reflective thinking m m




7) In addition to attestation and assurance services, CPA firms provide other services to their
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clients. List three of these services.
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Answer: Other services performed by a CPA firm include:
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• accounting and bookkeeping services m m m




• tax services m




• management consulting and risk advisory services. m m m m m




Terms: Activities of CPA firms
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Diff: Moderate
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Objective: LO 2-1
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AACSB: Reflective thinking m m




2
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8) Many small, local accounting firms perform audits as their primary service to their clients.
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Answer: FALSE
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Terms: Small accounting firms do not perform audits
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Diff: Easy
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Objective: LO 2-1 m m




AACSB: Reflective thinking m m




9) Sarbanes-Oxley and the Securities and Exchange Commission restrict auditors from providing
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many consulting services to their publicly traded audit clients.
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Answer: TRUE m




Terms: Sarbanes-Oxley and Securities Exchange Commission restrictions
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Diff: Easy
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Objective: LO 2-1 m m




AACSB: Reflective thinking m m




Topic: SOX
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2.2 Learning Objective 2-2 m m




1) Which of the following statements is true as it relates to limited liability partnerships?
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A) Only senior partners are liable for the partnerships debts.
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B) Partners have no liability in a limited liability partnership arrangement.
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C) Partners are personally liable for the acts of those under their supervision.
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D) All partners must be AICPA members.
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Answer: C
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Terms: Limited liability partnerships
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Diff: Challenging
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Objective: LO 2-2 m m




AACSB: Reflective thinking m m




2) Which staff level in a CPA firm performs most of the detailed audit work?
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A) partner
B) staff assistant
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C) senior auditor m




D) senior manager m




Answer: B
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Terms: Staff levels in CPA firm
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Diff: Easy
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Objective: LO 2-2 m m




AACSB: Reflective thinking m m




3
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