TEST BANK
Auditing: A Business Risk Approach with Cases
TE
Rittenberg Johnstone
8th Edition
S TB
A N
KS
O
LU
TI
O
N
S
, Table of Contents
1. Auditing: Integral to the Economy
2. Corporate Governance and Audits
TE
3. Judgment and Ethical Decision Making
4. Audit Risk, Business Risk, and Audit Planning
5. Internal Control over Financial Reporting
6. Performing an Integrated Audit
S
7. Audit Evidence
8. Tools for Gathering Audit Evidence
TB
9. Auditing for Fraud
10.Auditing Revenue and Related Accounts
11.Auditing Inventory and the Acquisition & Payment Cycle
12.Auditing Cash and Other Liquid Assets
A
13.Auditing Long-Lived Assets and Related Expenses
14.Auditing Long-Term Liabilities, Equity, and Other Transactions
N
15.Completing the Audit and Ensuring Quality
16.Communicating Audit and Attestation Results
17.Professional Liability and Responsibilities
KS
18. Advanced Topics in Complex Auditing Judgments
O
LU
TI
O
N
S
, Chapter 1: Auditing: Integral to the Economy
TE
Student:
1. The need for assurance services arises because the interests of the users of
information may be different from that of the interests of those responsible for providing
information.
S
True False
TB
2. An audit of financial statements is a form of attestation service.
True False
A
3. Independence is an attribute necessary to perform assurance services.
True False
N
KS
4. A bank using Milton Company's financial statements to determine the creditworthiness
of a potential loan to Milton is a good example of the need for unbiased reporting.
True False
O
5. Independence is only required for assurance service providers.
True False
LU
6. A CPA automatically qualifies as an assurance provider in all areas of business.
True False
TI
7. Attestation services are a subset of assurance services and always involve a report
O
that goes to a third party.
True False
N
S
, 8. The American Institute of Certified Public Accountants has the primary authority to set
auditing standards for public companies.
True False
TE
9. The audit function is unique because it exists to perform services on a "client" on
behalf of shareholders, directors and other parties.
True False
S
10. Auditing is the process of attesting to assertions about economic actions and events.
TB
True False
11. Auditing is the process of verifying the accuracy of the financial statements.
A
True False
N
12. Internal auditing only provides assurance services to clients.
True False
KS
13. Auditing primarily exists because users need unbiased information on which to
assess management performance and make economic decisions.
O
True False
LU
14. The degree of confidence that users place on management's financial statements is
higher than that placed on audited financial statements because few users have direct
knowledge of the company's operations and management is the most knowledgeable
about operations.
TI
True False
O
15. U.S. nonpublic companies will have an audit performed in accordance with generally
accepted auditing standards that have been promulgated by the PCAOB.
True False
N
S
Auditing: A Business Risk Approach with Cases
TE
Rittenberg Johnstone
8th Edition
S TB
A N
KS
O
LU
TI
O
N
S
, Table of Contents
1. Auditing: Integral to the Economy
2. Corporate Governance and Audits
TE
3. Judgment and Ethical Decision Making
4. Audit Risk, Business Risk, and Audit Planning
5. Internal Control over Financial Reporting
6. Performing an Integrated Audit
S
7. Audit Evidence
8. Tools for Gathering Audit Evidence
TB
9. Auditing for Fraud
10.Auditing Revenue and Related Accounts
11.Auditing Inventory and the Acquisition & Payment Cycle
12.Auditing Cash and Other Liquid Assets
A
13.Auditing Long-Lived Assets and Related Expenses
14.Auditing Long-Term Liabilities, Equity, and Other Transactions
N
15.Completing the Audit and Ensuring Quality
16.Communicating Audit and Attestation Results
17.Professional Liability and Responsibilities
KS
18. Advanced Topics in Complex Auditing Judgments
O
LU
TI
O
N
S
, Chapter 1: Auditing: Integral to the Economy
TE
Student:
1. The need for assurance services arises because the interests of the users of
information may be different from that of the interests of those responsible for providing
information.
S
True False
TB
2. An audit of financial statements is a form of attestation service.
True False
A
3. Independence is an attribute necessary to perform assurance services.
True False
N
KS
4. A bank using Milton Company's financial statements to determine the creditworthiness
of a potential loan to Milton is a good example of the need for unbiased reporting.
True False
O
5. Independence is only required for assurance service providers.
True False
LU
6. A CPA automatically qualifies as an assurance provider in all areas of business.
True False
TI
7. Attestation services are a subset of assurance services and always involve a report
O
that goes to a third party.
True False
N
S
, 8. The American Institute of Certified Public Accountants has the primary authority to set
auditing standards for public companies.
True False
TE
9. The audit function is unique because it exists to perform services on a "client" on
behalf of shareholders, directors and other parties.
True False
S
10. Auditing is the process of attesting to assertions about economic actions and events.
TB
True False
11. Auditing is the process of verifying the accuracy of the financial statements.
A
True False
N
12. Internal auditing only provides assurance services to clients.
True False
KS
13. Auditing primarily exists because users need unbiased information on which to
assess management performance and make economic decisions.
O
True False
LU
14. The degree of confidence that users place on management's financial statements is
higher than that placed on audited financial statements because few users have direct
knowledge of the company's operations and management is the most knowledgeable
about operations.
TI
True False
O
15. U.S. nonpublic companies will have an audit performed in accordance with generally
accepted auditing standards that have been promulgated by the PCAOB.
True False
N
S
