TEST BANK For Auditing & Assurance Services: A
Systematic Approach, 12th Edition
Chapters 1 - 21 Complete
,Chapter 1: An Introduction to Assurance and Financial Statement Auditing
Chapter 2: The Financial Statement Auditing Environment
Chapter 3: Audit Planning, Types of Audit Tests, and Materiality
Chapter 4: Risk Assessment
Chapter 5: Evidence and Documentation
Chapter 6: Internal Control in a Financial Statement Audit
Chapter 7: Auditing Internal Control over Financial Reporting
Chapter 8: Audit Sampling: An Overview and Application to Tests of Controls
Chapter 9: Audit Sampling: An Application to Substantive Tests of Account Balances
Chapter 10: Auditing the Revenue Process
Chapter 11: Auditing the Purchasing Process
Chapter 12: Auditing the Human Resource Management Process
Chapter 13: Auditing the Inventory Management Process
Chapter 14: Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets, and
Property, Plant, and Equipment
Chapter 15: Auditing the Financing/Investing Process: Long-Term Liabilities, Stockholders’ Equity,
and Income Statement Accounts
Chapter 16: Auditing the Financing/Investing Process: Cash and Investments
Chapter 17: Completing the Audit Engagement
Chapter 18: Reports on Audited Financial Statements
Chapter 19: Professional Conduct, Independence, and Quality Management
Chapter 20: Legal Liability
,Chapter 21: Assurance, Attestation, and Internal Auditing Services
Auditing & Assurance Services: A Systematic Approach, 12e (Messier) Chapter
1 An Introduction to Assurance and Financial Statement Auditing
1) Auditing focuses on rules, techniques, and computations required to prepare and
analyze financial information.
ANSWER: FALSE
Difficulty: 1 Easy
Topic: The Importance for Studying Auditing
Learning Objective: 01-01 Understand why studying auditing can be valuable to you whether or
not you plan to become an auditor, and why it is different from studying accounting.
Bloom's: Remember
AACSB: Communication
AICPA: BB Legal; FN Decision Making
2) Decision makers demand reliable information that is provided by accountants.
ANSWER: TRUE
Difficulty: 1 Easy
Topic: The Demand for Auditing and Assurance
Learning Objective: 01-02 Understand the demand for auditing and be able to explain the
desired characteristics of auditors and audit services through an analogy to a house inspector
and a house inspection service.
Bloom's: Understand
AACSB: Communication
AICPA: FN Decision Making; BB Industry
3) Information asymmetry seldom occurs.
ANSWER: FALSE
Difficulty: 2 Medium
Topic: The Demand for Auditing and Assurance
Learning Objective: 01-02 Understand the demand for auditing and be able to explain the
desired characteristics of auditors and audit services through an analogy to a house inspector
and a house inspection service.
Bloom's: Apply
AACSB: Communication
AICPA: BB Industry; FN Reporting
, 4) Conflicts of interest often occur between absentee owners and managers.
XV XV XV XV XV XV XV XV XV
ANSWER: TRUE Difficult X V XV
y: 2 Medium
XV XV
Topic: The Demand for Auditing and Assurance
X V XV XV XV XV XV
Learning Objective: 01- XV X V
02 Understand the demand for auditing and be able to explain the desired characteristics of a
XV XV XV XV XV XV XV XV XV XV XV XV XV XV XV
uditors and audit services through an analogy to a house inspector and a house inspection ser
XV XV XV XV XV XV XV XV XV XV XV XV XV XV XV
vice.
Bloom's: Apply X V
AACSB: Communication X V
AICPA: BB Industry; FN ReportingX V XV XV XV
5) Auditing services and attestation services are the same.
XV XV XV XV XV XV XV
ANSWER: FALSE Difficult X V XV
y: 1 Easy
XV XV
Topic: Auditing, Attest, and Assurance Services Defined
X V XV XV XV XV XV
Learning Objective: 01- XV X V
03 Understand the relationships among auditing, attestation, and assurance services.
XV XV XV XV XV XV XV XV XV
Bloom's: Understand AA X V XV
CSB: Communication
XV
AICPA: BB Industry; FN ReportingX V XV XV XV
6) Auditing is a type of attest service. XV XV XV XV XV XV
ANSWER: TRUE Difficult X V XV
y: 1 Easy
XV XV
Topic: Auditing, Attest, and Assurance Services Defined
X V XV XV XV XV XV
Learning Objective: 01- XV X V
03 Understand the relationships among auditing, attestation, and assurance services.; 01-
XV XV XV XV XV XV XV XV XV XV
04 Know the basic definition of a financial statement audit.
XV XV XV XV XV XV XV XV XV
Bloom's: Understand AA X V XV
CSB: Communication
XV
AICPA: BB Industry; FN ReportingX V XV XV XV
7) Testing all transactions that occurred during the period is cost prohibitive.
XV XV XV XV XV XV XV XV XV XV
ANSWER: TRUE Difficult X V XV
y: 2 Medium Topic: The
XV XV XV X V XV
Audit Process XV
Learning Objective: 01- XV X V
06 Be able to explain why on most audit engagements an auditor tests only a sample of transa
XV XV XV XV XV XV XV XV XV XV XV XV XV XV XV XV XV
ctions that occurred. XV XV
Systematic Approach, 12th Edition
Chapters 1 - 21 Complete
,Chapter 1: An Introduction to Assurance and Financial Statement Auditing
Chapter 2: The Financial Statement Auditing Environment
Chapter 3: Audit Planning, Types of Audit Tests, and Materiality
Chapter 4: Risk Assessment
Chapter 5: Evidence and Documentation
Chapter 6: Internal Control in a Financial Statement Audit
Chapter 7: Auditing Internal Control over Financial Reporting
Chapter 8: Audit Sampling: An Overview and Application to Tests of Controls
Chapter 9: Audit Sampling: An Application to Substantive Tests of Account Balances
Chapter 10: Auditing the Revenue Process
Chapter 11: Auditing the Purchasing Process
Chapter 12: Auditing the Human Resource Management Process
Chapter 13: Auditing the Inventory Management Process
Chapter 14: Auditing the Financing/Investing Process: Prepaid Expenses, Intangible Assets, and
Property, Plant, and Equipment
Chapter 15: Auditing the Financing/Investing Process: Long-Term Liabilities, Stockholders’ Equity,
and Income Statement Accounts
Chapter 16: Auditing the Financing/Investing Process: Cash and Investments
Chapter 17: Completing the Audit Engagement
Chapter 18: Reports on Audited Financial Statements
Chapter 19: Professional Conduct, Independence, and Quality Management
Chapter 20: Legal Liability
,Chapter 21: Assurance, Attestation, and Internal Auditing Services
Auditing & Assurance Services: A Systematic Approach, 12e (Messier) Chapter
1 An Introduction to Assurance and Financial Statement Auditing
1) Auditing focuses on rules, techniques, and computations required to prepare and
analyze financial information.
ANSWER: FALSE
Difficulty: 1 Easy
Topic: The Importance for Studying Auditing
Learning Objective: 01-01 Understand why studying auditing can be valuable to you whether or
not you plan to become an auditor, and why it is different from studying accounting.
Bloom's: Remember
AACSB: Communication
AICPA: BB Legal; FN Decision Making
2) Decision makers demand reliable information that is provided by accountants.
ANSWER: TRUE
Difficulty: 1 Easy
Topic: The Demand for Auditing and Assurance
Learning Objective: 01-02 Understand the demand for auditing and be able to explain the
desired characteristics of auditors and audit services through an analogy to a house inspector
and a house inspection service.
Bloom's: Understand
AACSB: Communication
AICPA: FN Decision Making; BB Industry
3) Information asymmetry seldom occurs.
ANSWER: FALSE
Difficulty: 2 Medium
Topic: The Demand for Auditing and Assurance
Learning Objective: 01-02 Understand the demand for auditing and be able to explain the
desired characteristics of auditors and audit services through an analogy to a house inspector
and a house inspection service.
Bloom's: Apply
AACSB: Communication
AICPA: BB Industry; FN Reporting
, 4) Conflicts of interest often occur between absentee owners and managers.
XV XV XV XV XV XV XV XV XV
ANSWER: TRUE Difficult X V XV
y: 2 Medium
XV XV
Topic: The Demand for Auditing and Assurance
X V XV XV XV XV XV
Learning Objective: 01- XV X V
02 Understand the demand for auditing and be able to explain the desired characteristics of a
XV XV XV XV XV XV XV XV XV XV XV XV XV XV XV
uditors and audit services through an analogy to a house inspector and a house inspection ser
XV XV XV XV XV XV XV XV XV XV XV XV XV XV XV
vice.
Bloom's: Apply X V
AACSB: Communication X V
AICPA: BB Industry; FN ReportingX V XV XV XV
5) Auditing services and attestation services are the same.
XV XV XV XV XV XV XV
ANSWER: FALSE Difficult X V XV
y: 1 Easy
XV XV
Topic: Auditing, Attest, and Assurance Services Defined
X V XV XV XV XV XV
Learning Objective: 01- XV X V
03 Understand the relationships among auditing, attestation, and assurance services.
XV XV XV XV XV XV XV XV XV
Bloom's: Understand AA X V XV
CSB: Communication
XV
AICPA: BB Industry; FN ReportingX V XV XV XV
6) Auditing is a type of attest service. XV XV XV XV XV XV
ANSWER: TRUE Difficult X V XV
y: 1 Easy
XV XV
Topic: Auditing, Attest, and Assurance Services Defined
X V XV XV XV XV XV
Learning Objective: 01- XV X V
03 Understand the relationships among auditing, attestation, and assurance services.; 01-
XV XV XV XV XV XV XV XV XV XV
04 Know the basic definition of a financial statement audit.
XV XV XV XV XV XV XV XV XV
Bloom's: Understand AA X V XV
CSB: Communication
XV
AICPA: BB Industry; FN ReportingX V XV XV XV
7) Testing all transactions that occurred during the period is cost prohibitive.
XV XV XV XV XV XV XV XV XV XV
ANSWER: TRUE Difficult X V XV
y: 2 Medium Topic: The
XV XV XV X V XV
Audit Process XV
Learning Objective: 01- XV X V
06 Be able to explain why on most audit engagements an auditor tests only a sample of transa
XV XV XV XV XV XV XV XV XV XV XV XV XV XV XV XV XV
ctions that occurred. XV XV
