Test Bank For Auditing An International Approach 7th Edition By Bewley


Edition: 7th Edition

Format: Downloadable ZIP File

Resource Type: Test bank

Duration: Unlimited downloads

Delivery: Instant Download

Test Bank For Auditing An International Approach 7th Edition By Bewley

ISBN-10: 1259087468, ISBN-13: 9781259087462

1. Which of the following best describes the main reason that independent auditors report on a company’s financial statements?

A. Management fraud may exist within the company and it is likely that the independent auditors will detect it.


B. Users of financial statements need confidence in the numbers they base their decisions on.


C. Misstated account balances may be corrected as the result of the independent audit work.


D. The accounting system from which the financial statements are derived may have a poorly designed system of internal control.


2. Reducing information risk means the same as ________.

A. serving the public interest


B. monitoring economic activities


C. improving the credibility of information


D. ensuring generally accepted accounting principles are used to measure profit


3. Three-party accountability is a special case of which economic theory problem?

A. independence


B. agency


C. business risk


D. forensics


4. The agency problem can be mitigated by ________.

A. greater transparency


B. a higher degree of independence


C. design of contracts


D. internal auditing


5. The underlying conditions that create demand by users for reliable financial information include the fact that ________.

A. more reliable information will allow investors to calculate the rate of return on their investment


B. users are separated from accounting records by distance and time


C. governments rely on such information to create tax policies


D. there is a need for the expression of an opinion as to the fairness of financial statements


6. The auditee is the person or company ________.

A. who will use the audited information


B. who performs an audit


C. who pays the audit fee


D. whose information is being audited


7. Professional judgment is a widely used concept in accounting and auditing. How is it defined in the audit standards?

A. There is no definition of professional judgment in the auditing standards.


B. Professional judgment includes consideration of key principles and concepts of disciplines underlying the professional standards, such as economics, psychology, law, finance, statistics and philosophy.


C. Professional judgment means reaching a complex decision by incorporating auditing standards, accounting standards, and rules of professional ethics in a coherent manner.


D. Professional judgment involves specialized concepts and language integrating several disciplines in order to provide appropriate justification for audit decisions.


8. What is the primary role and responsibility of independent external auditors?

A. to prepare a company’s annual financial statements and notes.


B. to perform an audit and provide an opinion on the financial statements of a company.


C. to provide business consulting advice to audit clients.


D. to obtain an understanding of a client’s internal control system and prepare a report for management about control weaknesses.


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