Test Bank For Auditing & Assurance Services A Systematic Approach William Messier Jr 10th Edition
ISBN-13: 978-0077732509, ISBN-10: 0077732502
Chapter 01
An Introduction to Assurance and Financial Statement Auditing
True / False Questions
| 1. |
Independence standards are required for audits of public companies, but not for audits of private companies.
True False |
| 2. |
Decision makers demand reliable information that is provided by accountants.
True False |
| 3. |
Information asymmetry seldom occurs.
True False |
| 4. |
Conflicts of interest often occur between absentee owners and managers.
True False |
| 5. |
Auditing services and attestation services are the same.
True False |
| 6. |
Auditing is a type of attest service.
True False |
| 7. |
Testing all transactions that occurred during the period is cost prohibitive.
True False |
Multiple Choice Questions
| 8. |
Why do auditors generally use a sampling approach to evidence gathering?
| A. |
Auditors are experts and do not need to look at much to know whether the financial statements are correct or not. |
| B. |
Auditors must balance the cost of the audit with the need for precision. |
| C. |
Auditors must limit their exposure to their auditee to maintain independence. |
| D. |
The auditor’s relationship with the auditee is generally adversarial, so the auditor will not have access to all of the financial information of the company. |
|
| 9. |
Which of the following statements best describes a relationship between sample size and other elements of auditing?
| A. |
If materiality increases, so will the sample size. |
| B. |
If the desired level of assurance increases, sample sizes can be smaller. |
| C. |
If materiality decreases, sample size will need to increase. |
| D. |
There is no relationship between sample size and materiality or the desired level of assurance. |
|
| 10. |
Which of the following statements about the study of auditing is NOT true?
| A. |
The study of auditing can be valuable to future accountants and business decision makers whether or not they plan to become auditors. |
| B. |
The study of auditing focuses on learning the analytical and logical skills necessary to evaluate the relevance and reliability of information. |
| C. |
The study of auditing focuses on learning the rules, techniques, and computations required to analyze financial statements. |
| D. |
The study of auditing begins with the understanding of a coherent logical framework and techniques useful for gathering and analyzing evidence about others’ assertions. |
|
| 11. |
The basic purpose of a financial statement audit is to
| B. |
Examine individual transactions so that the auditor may certify as to their validity. |
| C. |
Provide assurance regarding whether the auditee’s financial statements are fairly stated. |
| D. |
Assure the consistent application of correct accounting procedures. |
|
| 12. |
Assurance services may improve all of the following except
|
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