1
,Auditing rand rAssurance rServices, r18e r(Arens/Elder/Beasley)
rChapterr1 r The rDemand rforrAuditrand rOtherrA ssurance rServices
Learning rObjective r1-1
1) TherSarbanes-OxleyrAct rapplies rto rwhichrofrtherfollowing rcompanies?
A) Allrcompanies
B) Privatelyrheld rcompanies
C) Publicrcompanies
D) All rpublic rcompanies rand rprivatelyrheld rcompanies rwith rassets rgreaterrthan r$500 rmillion
rAnswer: r C
Terms: rSarbanes-OxleyAct
rDiff: r Easy
Objective: r LO r1-1
AACSB:rReflectivethinkingskills
rTopic: r SOX
2) Whichrofrtherfollowingris rconsidered raudit revidence?
rA)
Oralrstatements Written Auditor
rmadebymanagement rCommunications rObservation
Y N N
B)
Oralrstatements Written Auditor
r madebymanagement r Communications Observatio
rn
N Y Y
C)
Oralrstatements Written Auditor
r madebymanagement r Communications r Observation
Y Y Y
D)
Oralrstatements Written Auditor
r madebymanagement r Communications r Observation
N N Y
Answer: r C
Terms: rAuditevidence
rDiff: rModerate
rObjective: r LO r1-1
AACSB: r Reflectiverthinking rskills
2
,3) Evidencerisrparamount rtoraudit randrattestationrengagements. rList rtherfourrbasicrt ypesrofraudit
revidence.
Answer: r Therfourrt ypes rofraudit rand rattestation revidencerinclude:
1. Electronicrand rdocumentaryrdata rabout rtransactions
2. Writtenrand relectronicrcommunications rwith routsiders
3. Observations rbyrthe rauditor
4. Oraltestimonyoftheauditee(client)
rTerms: rBasic rtypes rof raudit revidence
rDiff: r Easy
Objective: r LO r1-1
AACSB: r Reflectiverthinking rskills
4) Thercriteriarbywhich ranrauditor revaluatesrtherinformationrunderraudit rmayrvaryrwithrthe
r information r being r audited.
A) True
B) False
rAnswer:
rA
Terms:rCriteriarwhichran rauditorrevaluates rinformation
rDiff: r Easy
Objective: r LO r1-1
AACSB: r Reflectiverthinking rskills
5) Thercriteriarusedrbyranrexternalrauditorrtorevaluaterpublished rfinancialrstatementsrarerknownras
rgenerally raccepted rauditing rstandards.
A) True
B) False
rAnswer:
rB
Terms: r Criteriarusedrbyrexternalrauditorrto revaluaterpublishedrfinancialrstatements rDiff:
r Easy
Objective: r LO r1-1
AACSB: r Reflectiverthinking rskills
6) TherSarbanes-OxleyrAct restablishesrstandardsrrelatedrtortherauditsrofrprivatelyheld
rcompanies.
A) True
B) False
rAnswer:
rB
Terms: rSarbanes-OxleyAct
rDiff: r Easy
Objective: r LO r1-1
AACSB:rReflectivethinkingskills
rTopic: r SOX
3
, 7) TherSarbanes-OxleyrAct risrwidelyviewedras rhavingrusheredrinrsweepingrchanges rtorauditing
rand r financial rreporting.
A) True
B) False
rAnswer:
rA
Terms: rSarbanes-OxleyAct
rDiff: r Easy
Objective: r LO r1-1
AACSB:rReflectivethinkingskills
rTopic: r SOX
8) Anrauditor rmust rbe rcompetent rand rhave ran rindependent rmental rattitude.
A) True
B) False
rAnswer:
rA
Terms: r Competenceand rindependentmentalattitude
rDiff: r Easy
Objective: r LO r1-1
AACSB:rReflectivethinkingskills
r Learning rObjective r1-2
1) Recording, rclassifying, randrsummarizingreconomicreventsrinrarlogicalrmanner rforrtherpurpose rof
rproviding r financial r information r for rdecision r making r is rcommonly rcalled:
A) finance.
B) auditing.
C) accounting.
D) economics.
rAnswer: r C
Terms: r Recording,rclassifying,randsummarizingreconomicrevents
rDiff: r Easy
Objective: r LO r1-2
AACSB: r Reflectiverthinking rskills
2) Anraccountant:
A) must rpossessrexpertise rin rtheraccumulationrofraudit revidence.
B) must rdecide rthernumberrand rtypes rofritems rto rtest.
C) must rhaveranrunderstandingro frtherprinciples rand rrules rthat rprovidertherbasis rforrpreparingrthe
raccounting rinformation.
D) mustrberarCPA.
rAnswer: r C
Terms: r Distinguishesauditorsfromaccountants
rDiff: r Moderate
Objective: r LO r1-2
AACSB: r Reflectiverthinking rskills
4
,Auditing rand rAssurance rServices, r18e r(Arens/Elder/Beasley)
rChapterr1 r The rDemand rforrAuditrand rOtherrA ssurance rServices
Learning rObjective r1-1
1) TherSarbanes-OxleyrAct rapplies rto rwhichrofrtherfollowing rcompanies?
A) Allrcompanies
B) Privatelyrheld rcompanies
C) Publicrcompanies
D) All rpublic rcompanies rand rprivatelyrheld rcompanies rwith rassets rgreaterrthan r$500 rmillion
rAnswer: r C
Terms: rSarbanes-OxleyAct
rDiff: r Easy
Objective: r LO r1-1
AACSB:rReflectivethinkingskills
rTopic: r SOX
2) Whichrofrtherfollowingris rconsidered raudit revidence?
rA)
Oralrstatements Written Auditor
rmadebymanagement rCommunications rObservation
Y N N
B)
Oralrstatements Written Auditor
r madebymanagement r Communications Observatio
rn
N Y Y
C)
Oralrstatements Written Auditor
r madebymanagement r Communications r Observation
Y Y Y
D)
Oralrstatements Written Auditor
r madebymanagement r Communications r Observation
N N Y
Answer: r C
Terms: rAuditevidence
rDiff: rModerate
rObjective: r LO r1-1
AACSB: r Reflectiverthinking rskills
2
,3) Evidencerisrparamount rtoraudit randrattestationrengagements. rList rtherfourrbasicrt ypesrofraudit
revidence.
Answer: r Therfourrt ypes rofraudit rand rattestation revidencerinclude:
1. Electronicrand rdocumentaryrdata rabout rtransactions
2. Writtenrand relectronicrcommunications rwith routsiders
3. Observations rbyrthe rauditor
4. Oraltestimonyoftheauditee(client)
rTerms: rBasic rtypes rof raudit revidence
rDiff: r Easy
Objective: r LO r1-1
AACSB: r Reflectiverthinking rskills
4) Thercriteriarbywhich ranrauditor revaluatesrtherinformationrunderraudit rmayrvaryrwithrthe
r information r being r audited.
A) True
B) False
rAnswer:
rA
Terms:rCriteriarwhichran rauditorrevaluates rinformation
rDiff: r Easy
Objective: r LO r1-1
AACSB: r Reflectiverthinking rskills
5) Thercriteriarusedrbyranrexternalrauditorrtorevaluaterpublished rfinancialrstatementsrarerknownras
rgenerally raccepted rauditing rstandards.
A) True
B) False
rAnswer:
rB
Terms: r Criteriarusedrbyrexternalrauditorrto revaluaterpublishedrfinancialrstatements rDiff:
r Easy
Objective: r LO r1-1
AACSB: r Reflectiverthinking rskills
6) TherSarbanes-OxleyrAct restablishesrstandardsrrelatedrtortherauditsrofrprivatelyheld
rcompanies.
A) True
B) False
rAnswer:
rB
Terms: rSarbanes-OxleyAct
rDiff: r Easy
Objective: r LO r1-1
AACSB:rReflectivethinkingskills
rTopic: r SOX
3
, 7) TherSarbanes-OxleyrAct risrwidelyviewedras rhavingrusheredrinrsweepingrchanges rtorauditing
rand r financial rreporting.
A) True
B) False
rAnswer:
rA
Terms: rSarbanes-OxleyAct
rDiff: r Easy
Objective: r LO r1-1
AACSB:rReflectivethinkingskills
rTopic: r SOX
8) Anrauditor rmust rbe rcompetent rand rhave ran rindependent rmental rattitude.
A) True
B) False
rAnswer:
rA
Terms: r Competenceand rindependentmentalattitude
rDiff: r Easy
Objective: r LO r1-1
AACSB:rReflectivethinkingskills
r Learning rObjective r1-2
1) Recording, rclassifying, randrsummarizingreconomicreventsrinrarlogicalrmanner rforrtherpurpose rof
rproviding r financial r information r for rdecision r making r is rcommonly rcalled:
A) finance.
B) auditing.
C) accounting.
D) economics.
rAnswer: r C
Terms: r Recording,rclassifying,randsummarizingreconomicrevents
rDiff: r Easy
Objective: r LO r1-2
AACSB: r Reflectiverthinking rskills
2) Anraccountant:
A) must rpossessrexpertise rin rtheraccumulationrofraudit revidence.
B) must rdecide rthernumberrand rtypes rofritems rto rtest.
C) must rhaveranrunderstandingro frtherprinciples rand rrules rthat rprovidertherbasis rforrpreparingrthe
raccounting rinformation.
D) mustrberarCPA.
rAnswer: r C
Terms: r Distinguishesauditorsfromaccountants
rDiff: r Moderate
Objective: r LO r1-2
AACSB: r Reflectiverthinking rskills
4
