Test Bank for Auditing and Assurance Services, 18th edition by Arens Alvin, Elder Randal, Beasley Mark & Hogan Chris, All Chapters 1-23 ||Complete A+ Guide

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,Auditing and Assurance Services, 18e (Arens/Elder/Beasley)
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Chapter 1 The Demand for Audit and Other Assurance Services
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Learning Objective 1-1 f f




1) The Sarbanes-Oxley Act applies to which of the following companies?
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A) All companies f


B) Privately held companies f f


C) Public companies f


D) All public companies and privately held companies with assets greater than $500 million
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Answer: C
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Terms: Sarbanes-Oxley Act f f


Diff: Easy
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Objective: LO 1-1 f f


AACSB: Reflective thinking skills f f f


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

B)
Oral statements f Written Auditor
f made by management
f f Communications
f Observatio
f


n
N Y Y

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

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

Answer: C f


Terms: Audit evidence f f


Diff: Moderate
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Objective: LO 1-1
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AACSB: Reflective thinking skills f f f




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,3) Evidence is paramount to audit and attestation engagements. List the four basic types of audit
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evidence.
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Answer: The four types of audit and attestation evidence include:
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1. Electronic and documentary data about transactions
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2. Written and electronic communications with outsiders
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3. Observations by the auditor f f f


4. Oral testimony of the auditee (client)
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Terms: Basic types of audit evidence
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Diff: Easy
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Objective: LO 1-1 f f


AACSB: Reflective thinking skills
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4) The criteria by which an auditor evaluates the information under audit may vary with the
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information being audited.
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A) True
B) False
Answer: A
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Terms: Criteria which an auditor evaluates information
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Diff: Easy
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Objective: LO 1-1 f f


AACSB: Reflective thinking skills
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5) The criteria used by an external auditor to evaluate published financial statements are known as
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generally accepted auditing standards.
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A) True
B) False
Answer: B
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Terms: Criteria used by external auditor to evaluate published financial statements
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Diff: Easy
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Objective: LO 1-1 f f


AACSB: Reflective thinking skills
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6) The Sarbanes-Oxley Act establishes standards related to the audits of privately held
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companies.
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A) True
B) False
Answer: B
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Terms: Sarbanes-Oxley Act
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Diff: Easy
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Objective: LO 1-1 f f


AACSB: Reflective thinking skills
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Topic: SOX
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, 7) The Sarbanes-Oxley Act is widely viewed as having ushered in sweeping changes to auditing
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and financial reporting.
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A) True
B) False
Answer: A
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Terms: Sarbanes-Oxley Act
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Diff: Easy
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Objective: LO 1-1 f f


AACSB: Reflective thinking skills
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Topic: SOX
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8) An auditor must be competent and have an independent mental attitude.
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A) True
B) False
Answer: A
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Terms: Competence and independent mental attitude
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Diff: Easy
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Objective: LO 1-1 f f


AACSB: Reflective thinking skills
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f Learning Objective 1-2 f f




1) Recording, classifying, and summarizing economic events in a logical manner for the purpose of
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providing financial information for decision making is commonly called:
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A) finance.
B) auditing.
C) accounting.
D) economics.
Answer: C f


Terms: Recording, classifying, and summarizing economic events
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Diff: Easy
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Objective: LO 1-2 f f


AACSB: Reflective thinking skills f f f




2) An accountant:
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A) must possess expertise in the accumulation of audit evidence.
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B) must decide the number and types of items to test.
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C) must have an understanding of the principles and rules that provide the basis for preparing the
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accounting information.
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D) must be a CPA. f f f


Answer: C f


Terms: Distinguishes auditors from accountants
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Diff: Moderate
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Objective: LO 1-2 f f


AACSB: Reflective thinking skills f f f




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