Auditing and Assurance Services (16th Edition, Alvin A. Arens) Complete Test Bank with Questions and Answers

Auditing and Assurance Services, 16e (Arens/Elder/Beasley)
Chapter 1 The Demand for Audit and Other Assurance Services

1.1 Learning Objective 1-1

1) In the auditing process
A) the types and amounts of evidence remain constant from audit to audit.
B) the criteria for evaluating information will not vary depending on the information being
audited.
C) the audit report communicates the auditor's findings to users.
D) records are gathered by the auditor to determine whether the audited information is stated in
accordance with SEC standards.
Answer: C
Terms: Audit process
Diff: Moderate
Objective: LO 1-1
AACSB: Reflective thinking

2) Which of the following is considered audit evidence?
A)
Oral statements Written Auditor
made by management Communications Observation
Y N N

B)
Oral statements Written Auditor
made by management Communications Observation
N Y Y

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

D)
Oral statements Written Auditor
made by management Communications Observation
N N Y

Answer: C
Terms: Audit evidence
Diff: Easy
Objective: LO 1-1
AACSB: Reflective thinking



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,3) Which #tof #tthe #tfollowing #tcan #tbe #tused #tas #ta #tcriteria #tfor #tevaluating #tinformation #tbeing
#taudited?

A) International #tFinancial #tReporting #tStandards #t(IFRS)
B) Generally #tAccepted #tAccounting #tPrinciples #t(GAAP)
C) Internal #tRevenue #tCode #t(IRC)
D) all #tof #tthe
#tabove #tAnswer:

# t D

Terms: # t Criteria #tby #twhich #tan #tauditor #tevaluates
#tinformation #tDiff: # t Moderate

Objective: # t LO #t1-1
AACSB: # t Reflective #tthinking

4) Evidence #tis #tparamount #tto #taudit #tand #tattestation #tengagements. #tList #tthe #tfour #tbasic #ttypes #tof
#taudit #tevidence.

Answer: # t The #tfour #ttypes #tof #taudit #tand #tattestation #tevidence #tinclude
1. Electronic #tand #tdocumentary #tdata #tabout #ttransactions
2. Written #tand #telectronic #tcommunications #twith #toutsiders
3. Observations #tby #tthe #tauditor
4. Oral #ttestimony #tof #tthe #tauditee
#t(client) #tTerms: # t Basic #ttypes #tof #taudit

#tevidence #tDiff: # t Easy

Objective: # t LO #t1-1
AACSB: # t Reflective #tthinking

5) The #tcriteria #tby #twhich #tan #tauditor #tevaluates #tthe #tinformation #tunder #taudit #tmay #tvary
#twith #tthe #tinformation #tbeing #taudited.

Answer: # t TRUE
Terms: # t Criteria #tby #twhich #tan #tauditor #tevaluates
#tinformation #tDiff: # t Easy

Objective: # t LO #t1-1
AACSB: # t Reflective #tthinking

6) One #tcriteria #tused #tby #tan #texternal #tauditor #tto #tevaluate #tpublished #tfinancial #tstatements #tis
#tknown #tas #tgenerally #taccepted #tauditing #tstandards.

Answer: # t FALSE
Terms: # t Criteria #tused #tby #texternal #tauditor #tto #tevaluate #tpublished #tfinancial
#tstatements #tDiff: # t Easy

Objective: # t LO #t1-1
AACSB: # t Reflective #tthinking

7) Auditors #tstrive #tto #tmaintain #ta #thigh #tlevel #tof #tindependence #tto #tkeep #tthe #tconfidence #tof
#tusers #trelying #ton #ttheir #treports.

Answer: # t TRUE
#tTerms:

# t Independence #tDiff:

# t Easy



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,Objective: # t LO #t1-1
AACSB: # t Reflective #tthinking




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, 8) To #tperform #tan #taudit, #tthere #tmust #tbe #tinformation #tin #ta #tverifiable #tform #tand #tsome
#tcriteria #tby #twhich #tthe #tauditor #tcan #tevaluate #tthe #tinformation.

Answer: # t TRUE
#tTerms:

# t Independence #tDiff:

# t Easy

Objective: # t LO #t1-1
AACSB: # t Reflective #tthinking

9) An #tauditor #tmust #tbe #tcompetent #tand #thave #tan #tindependent #tmental
#tattitude. #tAnswer: # t TRUE

Terms: # t Criteria #tused #tby #texternal #tauditor #tto #tevaluate #tpublished #tfinancial
#tstatements #tDiff: # t Easy

Objective: # t LO #t1-1
AACSB: # t Reflective #tthinking

1.2 # t # t Learning #tObjective #t1-2

1) Recording, #tclassifying, #tand #tsummarizing #teconomic #tevents #tin #ta #tlogical #tmanner #tfor #tthe
#tpurpose #tof #tproviding #tfinancial #tinformation #tfor #tdecision #tmaking #tis #tcommonly #tcalled

A) finance.
B) auditing.
C) accounting.
D) economics.
#tAnswer: # t C

Terms: # t Recording, #tclassifying, #tand #tsummarizing #teconomic #tevents
#tDiff: # t Easy

Objective: # t LO #t1-2
AACSB: # t Reflective #tthinking

2) An #taccountant
A) must #tpossess #texpertise #tin #tthe #taccumulation #tof #taudit #tevidence.
B) must #tdecide #tthe #tnumber #tand #ttypes #tof #titems #tto #ttest.
C) must #thave #tan #tunderstanding #tof #tthe #tprinciples #tand #trules #tthat #tprovide #tthe #tbasis #tfor
#tpreparing #tthe #taccounting #tinformation.

D) must #tbe #ta
#tCPA. #tAnswer:

# tC

Terms: # t Distinguishes #tauditors #tfrom #taccountants
#tDiff: # t Moderate

Objective: # t LO #t1-2
AACSB: # t Reflective #tthinking




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