TEST BANK
Auditing: A Business Risk Approach with Cases
Rittenberg Johnstone
8th Edition
PR
O
FD
O
C
,Table of Contents
1. Auditing: Integral to the Economy
2. Corporate Governance and Audits
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
7. Audit Evidence
8. Tools for Gathering Audit Evidence
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
PR
13.Auditing Long-Lived Assets and Related Expenses
14.Auditing Long-Term Liabilities, Equity, and Other Transactions
15.Completing the Audit and Ensuring Quality
16.Communicating Audit and Attestation Results
O
17.Professional Liability and Responsibilities
18. Advanced Topics in Complex Auditing Judgments
FD
O
C
,Chapter 1: Auditing: Integral to the Economy
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.
True False
2. An audit of financial statements is a form of attestation service.
True False
PR
3. Independence is an attribute necessary to perform assurance services.
True False
O
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.
FD
True False
5. Independence is only required for assurance service providers.
O
True False
C
6. A CPA automatically qualifies as an assurance provider in all areas of business.
True False
7. Attestation services are a subset of assurance services and always involve a report
that goes to a third party.
True False
, 8. The American Institute of Certified Public Accountants has the primary authority to set
auditing standards for public companies.
True False
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
10. Auditing is the process of attesting to assertions about economic actions and events.
True False
PR
11. Auditing is the process of verifying the accuracy of the financial statements.
True False
12. Internal auditing only provides assurance services to clients.
O
True False
FD
13. Auditing primarily exists because users need unbiased information on which to
assess management performance and make economic decisions.
True False
O
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
C
knowledge of the company's operations and management is the most knowledgeable
about operations.
True False
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
Auditing: A Business Risk Approach with Cases
Rittenberg Johnstone
8th Edition
PR
O
FD
O
C
,Table of Contents
1. Auditing: Integral to the Economy
2. Corporate Governance and Audits
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
7. Audit Evidence
8. Tools for Gathering Audit Evidence
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
PR
13.Auditing Long-Lived Assets and Related Expenses
14.Auditing Long-Term Liabilities, Equity, and Other Transactions
15.Completing the Audit and Ensuring Quality
16.Communicating Audit and Attestation Results
O
17.Professional Liability and Responsibilities
18. Advanced Topics in Complex Auditing Judgments
FD
O
C
,Chapter 1: Auditing: Integral to the Economy
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.
True False
2. An audit of financial statements is a form of attestation service.
True False
PR
3. Independence is an attribute necessary to perform assurance services.
True False
O
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.
FD
True False
5. Independence is only required for assurance service providers.
O
True False
C
6. A CPA automatically qualifies as an assurance provider in all areas of business.
True False
7. Attestation services are a subset of assurance services and always involve a report
that goes to a third party.
True False
, 8. The American Institute of Certified Public Accountants has the primary authority to set
auditing standards for public companies.
True False
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
10. Auditing is the process of attesting to assertions about economic actions and events.
True False
PR
11. Auditing is the process of verifying the accuracy of the financial statements.
True False
12. Internal auditing only provides assurance services to clients.
O
True False
FD
13. Auditing primarily exists because users need unbiased information on which to
assess management performance and make economic decisions.
True False
O
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
C
knowledge of the company's operations and management is the most knowledgeable
about operations.
True False
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
