Auditing and Assurance Services An Applied Approach 1st Edition Stuart Test Bank

Auditing and Assurance Services An

Applied Approach 1st Edition Stuart
Test Bank
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Auditing and Assurance Services An Applied Approach 1st Edition Stuart Test Bank

c1
Student: ___________________________________________________________________________

1. Auditing is the process of reviewing the financial information prepared by the management of the
company.

True False

2. The relationship of the audit firm to the client can be described as the framework of an employer-
employee relationship.

True False

3. Some of the services that fall under attestation standards are reports on: (1) descriptions of
systems of internal controls, and (2) tax return preparation.

True False

4. For public companies, management typically prefers lower net income.

True False

5. Today's auditors play a crucial role in business and society.

True False

6. The Auditing Standards Board was formed in 1978 as an equal organization to the American
Institute of Certified Public Accountants (AICPA).

True False

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7. An important requirement of the auditing standards is that the auditor gather sufficient appropriate
evidence to determine whether the financial statements have been prepared by competent
individuals.

True False

8. An accounting cycle involves both balance sheet and income statement accounts and follows
transactions through a process where it begins to its conclusion.

True False

9. The auditor structures the evidence process by considering the assertions made by a consultant
in preparing the financial statements of the company.

True False

10. At the conclusion of the audit, the auditor issues an audit opinion to the SEC.

True False

11. The Securities Act of 1933 and the Securities Exchange Act of 1934 were designed to restore
investor confidence in the capital markets.

True False
12. Which of the following is a characteristic of the person doing the assessment of the financial
statements?

A. The person completing the assessment is an employee of the company.

B. The person completing the assessment works for an accounting firm that is associated with the
company only in a role of being hired to perform an audit.
C. The person performing the assessment may be a banker, current or potential stockholder, or a
regulatory body.
D. The person performing the assessment makes adjustments to the decisions recorded by the
firm so that outsiders have accurate information to make decisions.

13. Which of the following is a characteristic of the person doing the assessment of the financial
statements?

A. The person completing the assessment is not an employee of the company.

B. The person completing the assessment works for an accounting firm that is associated with the
company in a role of being hired to perform an internal audit.
C. The person performing the assessment may be a banker, current or potential stockholder, or a
regulatory body.
D. The person performing the assessment makes adjustments to the decisions recorded by the
firm so that outsiders have accurate information to make decisions.
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