Auditing and Assurance Services An Integrated Approach 13th Edition by Arens – Test Bank
ISBN-10 : 0136084737, ISBN-13 : 978-0136084730
Chapter 1
Multiple-Choice Questions
| 1.
easy |
Recording, classifying, and summarizing economic events in a logical manner for the purpose of providing financial information for decision making is commonly called: |
| c | a. finance. |
| b. auditing. | |
| c. accounting. | |
| d. economics. | |
| 2.
easy |
In the audit of historical financial statements, which of the following accounting bases is the most common? |
| c | a. Regulatory accounting principles. |
| b. Cash basis of accounting. | |
| c. Generally accepted accounting principles. | |
| d. Liquidation basis of accounting. | |
| 3.
easy |
Any service that requires a CPA firm to issue a report about the reliability of an assertion that is made by another party is a(n): |
| b | a. accounting and bookkeeping service. |
| b. attestation service. | |
| c. assurance service. | |
| d. tax service. | |
| 4. | Three common types of attestation services are: |
| easy | a. audits, reviews, and “other” attestation services. |
| a | b. audits, verifications, and “other” attestation services. |
| c. reviews, verifications, and “other” attestation services. | |
| d. audits, reviews, and verifications. | |
| 5. (SOX)
easy |
The organization that is responsible for providing oversight for auditors of public companies is called the ________. |
| d | a. Auditing Standards Board. |
| b. American Institute of Certified Public Accountants. | |
| c. Public Oversight Board. | |
| d. Public Company Accounting Oversight Board. | |
| 6. (SOX) | The Sarbanes-Oxley Act applies to which of the following companies? |
| easy | a. All companies. |
| c | b. Privately held companies. |
| c. Public companies. | |
| d. All public companies and privately held companies with assets greater than $500 million. | |
| 7.
medium |
Providing quantitative information that management and others can use to make decisions is the function of: |
| d | a. management information systems. |
| b. auditing. | |
| c. finance. | |
| d. accounting. | |
| 8. | An audit of historical financial statements most commonly includes the: |
| medium | a. balance sheet, the income statement, and the statement of cash flows. |
| d | b. income statement, the statement of cash flows, and the statement of net working capital. |
| c. statement of cash flows, the balance sheet, and the retained earnings statement. | |
| d. balance sheet, the income statement, and the statement of cash flows. | |
| 9.
medium |
The ___________ rate may be defined as approximately the rate a bank could earn by investing in U.S. treasury notes for the same length as the length of a business loan. |
| c | a. nominal |
| b. stated | |
| c. risk-free | |
| d. prevailing | |
| 10. | The use of the Certified Public Accountant title is regulated by: |
| medium | a. the federal government. |
| b | b. state law through a licensing department or agency of each state. |
| c. the American Institute of Certified Public Accountants through the licensing departments of the tax and auditing committees. | |
| d. the Securities and Exchange Commission. |
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