Exam (elaborations)

Auditing & Assurance Services William Messier 11th Edition - Test Bank

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Auditing & Assurance - Test Bank

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Auditing & Assurance - Test Bank

Auditing & Assurance Services: A Systematic Approach, 11e (Messier) Chapter 1 An Introduction to Assurance and Financial Statement Auditing 1) Auditing focuses on rules, techniques, and computations required to prepare and analyze financial information. Answer: FALSE Difficulty: 1 Easy Topic: T...

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,Auditing & Assurance Services: A Systematic Approach, 11e (Messier)
Chapter 1 An Introduction to Assurance and Financial Statement Auditing

1) Auditing focuses on rules, techniques, and computations required to prepare and analyze
financial information.

Answer: FALSE
Difficulty: 1 Easy
Topic: The Importance for Studying Auditing
Learning Objective: 01-01 Understand why studying auditing can be valuable to you whether or
not you plan to become an auditor, and why it is different from studying accounting.
Bloom's: Remember
AACSB: Communication
AICPA: BB Legal; FN Decision Making

2) Decision makers demand reliable information that is provided by accountants.

Answer: TRUE
Difficulty: 1 Easy
Topic: The Demand for Auditing and Assurance
Learning Objective: 01-02 Understand the demand for auditing and be able to explain the
desired characteristics of auditors and audit services through an analogy to a house inspector and
a house inspection service.
Bloom's: Understand
AACSB: Communication
AICPA: FN Decision Making; BB Industry

3) Information asymmetry seldom occurs.

Answer: FALSE
Difficulty: 2 Medium
Topic: The Demand for Auditing and Assurance
Learning Objective: 01-02 Understand the demand for auditing and be able to explain the
desired characteristics of auditors and audit services through an analogy to a house inspector and
a house inspection service.
Bloom's: Apply
AACSB: Communication
AICPA: BB Industry; FN Reporting

1
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.

,4) Conflicts of interest often occur between absentee owners and managers.

Answer: TRUE
Difficulty: 2 Medium
Topic: The Demand for Auditing and Assurance
Learning Objective: 01-02 Understand the demand for auditing and be able to explain the
desired characteristics of auditors and audit services through an analogy to a house inspector and
a house inspection service.
Bloom's: Apply
AACSB: Communication
AICPA: BB Industry; FN Reporting

5) Auditing services and attestation services are the same.

Answer: FALSE
Difficulty: 1 Easy
Topic: Auditing, Attest, and Assurance Services Defined
Learning Objective: 01-03 Understand the relationships among auditing, attestation, and
assurance services.
Bloom's: Understand
AACSB: Communication
AICPA: BB Industry; FN Reporting

6) Auditing is a type of attest service.

Answer: TRUE
Difficulty: 1 Easy
Topic: Auditing, Attest, and Assurance Services Defined
Learning Objective: 01-03 Understand the relationships among auditing, attestation, and
assurance services.; 01-04 Know the basic definition of a financial statement audit.
Bloom's: Understand
AACSB: Communication
AICPA: BB Industry; FN Reporting

7) Testing all transactions that occurred during the period is cost prohibitive.

Answer: TRUE
Difficulty: 2 Medium
Topic: The Audit Process
Learning Objective: 01-06 Be able to explain why on most audit engagements an auditor tests
only a sample of transactions that occurred.
Bloom's: Apply
AACSB: Communication
AICPA: FN Decision Making; BB Critical Thinking

2
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.

, 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.

Answer: B
Difficulty: 1 Easy
Topic: The Audit Process
Learning Objective: 01-06 Be able to explain why on most audit engagements an auditor tests
only a sample of transactions that occurred.
Bloom's: Understand
AACSB: Communication
AICPA: FN Decision Making; BB Industry

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.

Answer: C
Difficulty: 2 Medium
Topic: The Audit Process
Learning Objective: 01-06 Be able to explain why on most audit engagements an auditor tests
only a sample of transactions that occurred.
Bloom's: Apply
AACSB: Analytical Thinking
AICPA: BB Critical Thinking; FN Risk Analysis

3
Copyright 2019 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior
written consent of McGraw-Hill Education.

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