Auditing: A Practical Approach with Data
ST
Analytics – 1st Edition
UV
TEST BANK
IA
_A
Laura Davis Wiley
PP
RO
Comprehensive Test Bank for Instructors
and Students
VE
© Laura Davis Wiley
D?
All rights reserved. Reproduction or distribution without permission is prohibited.
??
©STUDYSTREAM
, Chapter 1 i
ST
Introduction and Overview ofAudit and i i i i i
Assurance
SSUTT
i
Question iType: iTrue ior iFalse
UV UVIV
1. GAAP iand iIFRS iare iexamples iof iapplicable ifinancial ireporting iframework.
A. True
B. False
AIIA_A
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iFC: iReporting, iAACSB: i i Communication, iLearning
i Objective: iLO1.1, iSolution: iThe iapplicable ifinancial ireporting i i framework irefers i to ithe iset iof istandards
iused i in ipreparing ithe ihistorical ifinancial istatements, i i such ias iGAAP, iIFRS ior ia iFederal iIncome iTax
iBasis iof i Accounting.
_A_A
2. Review iof ifinancial iforecasts ifalls iunder iattestation iservices.
APPPP
A. True
B. False
PPR
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iFC: iMeasurement iAnalysis iand i i Interpretation,
i AACSB: iEthics, iLearning iObjective: iLO1.1, iSolution: iAttestation iservices i(under i i the iumbrella iof iassurance
i services) iinclude ireview iof ihistorical ifinancial istatements, ireview iof i i financial iforecasts, iand
iexamination iof i internal icontrol.
ROO
3. Within ia iU.S. icontext, ithe iapplicable ifinancial ireporting iframework iis itypically iGenerally
i Accepted iAccounting iPrinciples i(GAAP).
VVEE
A. True
B. False
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iFC: iMeasurement iAnalysis iand i
i Interpretation, i AACSB: iEthics, iLearning iObjective: iLO1.2, iSolution: iWithin ia iU.S. icontext, ithe i
DD?
i applicable ifinancial i reporting iframework iis itypically igenerally iaccepted iaccounting iprinciples i
i (GAAP).
???
?
1
, 4. Private icompanies, ior inon-issuers, iare inot irequired iby ithe iU.S. igovernment ito ihave ian i i annual
ST
i financial istatement iaudit
A. True
SSUTT
B. False
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iFC: iReporting, iAACSB: iAnalytic, i i Learning
i Objective: iLO1.2, iSolution: iPrivate icompanies, ior inon-issuers, iare inot irequired iby ithe
U.S. igovernment ito ihave ian iannual ifinancial istatement iaudit, ibut ioften iother iinterested iusers, i isuch ias ia
i bank ior ilender, imay irequest ithat ia iprivate icompany iprovide iaudited ifinancial i i statements.
UV UVIV
5. One iof ithe ireasons ithere iis ia idemand ifor ifinancial istatement iaudits iis ithat iusers iof ifinancial
i statements i often i lack i accounting i and i legal i knowledge i to i fully i understand i complex
AIIA_A
i accounting iand idisclosure ichoices.
A. True
B. False
_A_A
Answer: iA, iTaxonomy: iComprehension, iDifficulty: iEasy, iAICPA iPC: iCommunication, iAACSB: i i Analytic,
iLearning i Objective: iLO1.3, iSolution: iComplexity: iFinancial istatements iare icomplex, ithe i i amounts iare
ioften iaffected i by isignificant iestimates, iand ithe idisclosures ioften irequire isignificant i i knowledge iand
iexperience ito i evaluate. iMost ifinancial istatement iusers ido inot ihave ithe i i accounting iand ilegal
APPPP
iknowledge i to iassess ithe i reasonableness iof icomplex iaccounting iand i i disclosure ichoices ibeing imade
iby ithe i company.
PPR
6. In ifinancial iaccounting, ithe ibalance isheet iis ia istatement iof ifinancial iposition
A. True
ROO
B. False
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iPC: iCommunication, iAACSB: iAnalytic, i i Learning
i Objective: iLO1.3, iSolution: iIn ifinancial iaccounting, ithe ifinancial istatements iinclude i the i i balance isheet
i (statement iof ifinancial iposition), iincome istatement i(statement iof icomprehensive i i income), istatement iof
VVEE
icash i flows, istatement iof ichanges iin iequity iand iaccompanying inotes.
7. Business ivaluation ifalls iwithin ithe ipurview iof inon-assurance iservices.
DD?
A. True
B. False
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iFC: iMeasurement iAnalysis iand i i Interpretation,
???
i AACSB: iAnalytic, iLearning iObjective: iLO1.4, iSolution: iMany iof ithese iaccounting i i firms iprovide inon-
i assurance i(or inon-audit) iservices ias iwell ias iassurance iservices. iThese inon- i i assurance iservices
iinclude i management iconsulting, ibusiness ivaluation, imergers iand i i acquisitions, iinsolvency, itax iand
iaccounting i services.
?
2
, 8. Securities iExchange iAct iof i1934 iregulates ithe iongoing itrading iof isecurities iafter ithe
i initial i public ioffering iand irequires ithe iannual iaudit iof ia ipublic icompany’s ifinancial
i statements.
ST
A. True
B. False
SSUTT
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iBB: iGovernance iPerspective, iAACSB: i i Ethics,
i Learning iObjective: iLO1.5, iSolution: iThe iSecurities iExchange iAct iof i1934 iregulates ithe i ongoing
itrading iof i securities iafter ithe iinitial ipublic ioffering iand irequires ithe iannual iaudit iof ia i public
icompany’s ifinancial i statements.
UV UVIV
9. The iSecurities iAct iof i1933 ienhances iannual ifinancial idisclosures ifor ipublic icompanies i iand
i placed imore iemphasis ion icorporate iresponsibility.
A. True
AIIA_A
B. False
Answer: iB, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iBB: iGovernance iPerspective, iAACSB: iEthics,
iLearning iObjective: iLO1.5, iSolution: iThe iSecurities iAct iof i1933 iregulates ithe idisclosure i i i of ifinancial
_A_A
i information iin ia icompany’s iinitial ipublic ioffering iof istock iand irequires ithat ithe ifinancial i i information
ibe i audited.
APPPP
10. Neither iclient icharacteristics inor iactions iof ithe iauditor iaffect ithe iaudit irisk.
A. True
PPR
B. False
Answer: iB, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iFC: iReporting, iAACSB: iEthics, iLearning iObjective:
i LO1.6, iSolution: iAudit irisk iis iaffected iby iclient icharacteristics ias iwell ias i i actions iof ithe iauditor.
ROO
11. Materiality iis ia irelative iconcept, iand iit idiffers ifrom icompany ito icompany iand ifrom iyear i ito
i year ifor ia igiven icompany.
VVEE
A. True
B. False
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iFC: iReporting, iAACSB: iEthics, i i Learning
iObjective: i LO1.6, iSolution: iMateriality iis ia irelative iconcept, iand iit idiffers ifrom icompany i i to icompany
DD?
iand ifrom iyear i to iyear ifor ia igiven icompany. iAuditors idesign ian iaudit ito iprovide i ireasonable
iassurance ithat ithe ifinancial i statements iare ifree iof imaterial imisstatement. iHowever, i i auditors ido inot
idesign ian iaudit ito ilook ifor i immaterial imisstatements ibecause ithey iwould inot i iinfluence ia ifinancial
istatement iuser.
???
?
3
ST
Analytics – 1st Edition
UV
TEST BANK
IA
_A
Laura Davis Wiley
PP
RO
Comprehensive Test Bank for Instructors
and Students
VE
© Laura Davis Wiley
D?
All rights reserved. Reproduction or distribution without permission is prohibited.
??
©STUDYSTREAM
, Chapter 1 i
ST
Introduction and Overview ofAudit and i i i i i
Assurance
SSUTT
i
Question iType: iTrue ior iFalse
UV UVIV
1. GAAP iand iIFRS iare iexamples iof iapplicable ifinancial ireporting iframework.
A. True
B. False
AIIA_A
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iFC: iReporting, iAACSB: i i Communication, iLearning
i Objective: iLO1.1, iSolution: iThe iapplicable ifinancial ireporting i i framework irefers i to ithe iset iof istandards
iused i in ipreparing ithe ihistorical ifinancial istatements, i i such ias iGAAP, iIFRS ior ia iFederal iIncome iTax
iBasis iof i Accounting.
_A_A
2. Review iof ifinancial iforecasts ifalls iunder iattestation iservices.
APPPP
A. True
B. False
PPR
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iFC: iMeasurement iAnalysis iand i i Interpretation,
i AACSB: iEthics, iLearning iObjective: iLO1.1, iSolution: iAttestation iservices i(under i i the iumbrella iof iassurance
i services) iinclude ireview iof ihistorical ifinancial istatements, ireview iof i i financial iforecasts, iand
iexamination iof i internal icontrol.
ROO
3. Within ia iU.S. icontext, ithe iapplicable ifinancial ireporting iframework iis itypically iGenerally
i Accepted iAccounting iPrinciples i(GAAP).
VVEE
A. True
B. False
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iFC: iMeasurement iAnalysis iand i
i Interpretation, i AACSB: iEthics, iLearning iObjective: iLO1.2, iSolution: iWithin ia iU.S. icontext, ithe i
DD?
i applicable ifinancial i reporting iframework iis itypically igenerally iaccepted iaccounting iprinciples i
i (GAAP).
???
?
1
, 4. Private icompanies, ior inon-issuers, iare inot irequired iby ithe iU.S. igovernment ito ihave ian i i annual
ST
i financial istatement iaudit
A. True
SSUTT
B. False
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iFC: iReporting, iAACSB: iAnalytic, i i Learning
i Objective: iLO1.2, iSolution: iPrivate icompanies, ior inon-issuers, iare inot irequired iby ithe
U.S. igovernment ito ihave ian iannual ifinancial istatement iaudit, ibut ioften iother iinterested iusers, i isuch ias ia
i bank ior ilender, imay irequest ithat ia iprivate icompany iprovide iaudited ifinancial i i statements.
UV UVIV
5. One iof ithe ireasons ithere iis ia idemand ifor ifinancial istatement iaudits iis ithat iusers iof ifinancial
i statements i often i lack i accounting i and i legal i knowledge i to i fully i understand i complex
AIIA_A
i accounting iand idisclosure ichoices.
A. True
B. False
_A_A
Answer: iA, iTaxonomy: iComprehension, iDifficulty: iEasy, iAICPA iPC: iCommunication, iAACSB: i i Analytic,
iLearning i Objective: iLO1.3, iSolution: iComplexity: iFinancial istatements iare icomplex, ithe i i amounts iare
ioften iaffected i by isignificant iestimates, iand ithe idisclosures ioften irequire isignificant i i knowledge iand
iexperience ito i evaluate. iMost ifinancial istatement iusers ido inot ihave ithe i i accounting iand ilegal
APPPP
iknowledge i to iassess ithe i reasonableness iof icomplex iaccounting iand i i disclosure ichoices ibeing imade
iby ithe i company.
PPR
6. In ifinancial iaccounting, ithe ibalance isheet iis ia istatement iof ifinancial iposition
A. True
ROO
B. False
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iPC: iCommunication, iAACSB: iAnalytic, i i Learning
i Objective: iLO1.3, iSolution: iIn ifinancial iaccounting, ithe ifinancial istatements iinclude i the i i balance isheet
i (statement iof ifinancial iposition), iincome istatement i(statement iof icomprehensive i i income), istatement iof
VVEE
icash i flows, istatement iof ichanges iin iequity iand iaccompanying inotes.
7. Business ivaluation ifalls iwithin ithe ipurview iof inon-assurance iservices.
DD?
A. True
B. False
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iFC: iMeasurement iAnalysis iand i i Interpretation,
???
i AACSB: iAnalytic, iLearning iObjective: iLO1.4, iSolution: iMany iof ithese iaccounting i i firms iprovide inon-
i assurance i(or inon-audit) iservices ias iwell ias iassurance iservices. iThese inon- i i assurance iservices
iinclude i management iconsulting, ibusiness ivaluation, imergers iand i i acquisitions, iinsolvency, itax iand
iaccounting i services.
?
2
, 8. Securities iExchange iAct iof i1934 iregulates ithe iongoing itrading iof isecurities iafter ithe
i initial i public ioffering iand irequires ithe iannual iaudit iof ia ipublic icompany’s ifinancial
i statements.
ST
A. True
B. False
SSUTT
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iBB: iGovernance iPerspective, iAACSB: i i Ethics,
i Learning iObjective: iLO1.5, iSolution: iThe iSecurities iExchange iAct iof i1934 iregulates ithe i ongoing
itrading iof i securities iafter ithe iinitial ipublic ioffering iand irequires ithe iannual iaudit iof ia i public
icompany’s ifinancial i statements.
UV UVIV
9. The iSecurities iAct iof i1933 ienhances iannual ifinancial idisclosures ifor ipublic icompanies i iand
i placed imore iemphasis ion icorporate iresponsibility.
A. True
AIIA_A
B. False
Answer: iB, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iBB: iGovernance iPerspective, iAACSB: iEthics,
iLearning iObjective: iLO1.5, iSolution: iThe iSecurities iAct iof i1933 iregulates ithe idisclosure i i i of ifinancial
_A_A
i information iin ia icompany’s iinitial ipublic ioffering iof istock iand irequires ithat ithe ifinancial i i information
ibe i audited.
APPPP
10. Neither iclient icharacteristics inor iactions iof ithe iauditor iaffect ithe iaudit irisk.
A. True
PPR
B. False
Answer: iB, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iFC: iReporting, iAACSB: iEthics, iLearning iObjective:
i LO1.6, iSolution: iAudit irisk iis iaffected iby iclient icharacteristics ias iwell ias i i actions iof ithe iauditor.
ROO
11. Materiality iis ia irelative iconcept, iand iit idiffers ifrom icompany ito icompany iand ifrom iyear i ito
i year ifor ia igiven icompany.
VVEE
A. True
B. False
Answer: iA, iTaxonomy: iKnowledge, iDifficulty: iEasy, iAICPA iFC: iReporting, iAACSB: iEthics, i i Learning
iObjective: i LO1.6, iSolution: iMateriality iis ia irelative iconcept, iand iit idiffers ifrom icompany i i to icompany
DD?
iand ifrom iyear i to iyear ifor ia igiven icompany. iAuditors idesign ian iaudit ito iprovide i ireasonable
iassurance ithat ithe ifinancial i statements iare ifree iof imaterial imisstatement. iHowever, i i auditors ido inot
idesign ian iaudit ito ilook ifor i immaterial imisstatements ibecause ithey iwould inot i iinfluence ia ifinancial
istatement iuser.
???
?
3
