Test Bank For Auditing & Assurance Services 11th Edition By William 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

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