Test Bank All - 1-1 Chapter 01 Introduction to Auditing Multipl...

Auditing An International Approach, 8th Canadian Edition, 8e Wally Smieliauskas (Test Bank All Chapters)

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Chapter 01 - Introduction to Auditing 1-1 Chapter 01 Introduction to Auditing

Multiple Choice Questions

• Which of the following best describes the main reason that independent auditors report on a

company's financial statements?

• Management fraud may exist within the company and it is likely that the independent

auditors will detect it.

• Users of financial statements need confidence in the numbers they base their decisions on.
• Misstated account balances may be corrected as the result of the independent audit work.
• The accounting system from which the financial statements are derived may have a poorly

designed system of internal control.

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: Medium

Learning Objective: 01-01 Explain the importance of auditing.

Topic: 01-02 Introduction: The Concept of Auditing

Topic: 01-04 A Simple Illustration of the Importance of Auditing

• Reducing information risk means the same as ________.
• serving the public interest
• monitoring economic activities
• improving the credibility of information
• ensuring generally accepted accounting principles are used to measure profit

Accessibility: Keyboard Navigation

Blooms: Remember

Difficulty: Easy

Learning Objective: 01-01 Explain the importance of auditing.

Topic: 01-02 Introduction: The Concept of Auditing

Topic: 01-04 A Simple Illustration of the Importance of Auditing

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Chapter 01 - Introduction to Auditing 1-2

• In an audit engagement, the three-party accountability relationship involves all but which of

entities?

• society
• the users
• the auditor
• the accountable party

Accessibility: Keyboard Navigation

Blooms: Remember

Difficulty: Easy

Learning Objective: 01-01 Explain the importance of auditing.

Topic: 01-02 Introduction: The Concept of Auditing

• The idea of recognizing auditing as playing a bigger part of social control is known as

_____.

• Professional responsibility
• An accountability relationship
• The effective auditor concept
• The audit society concept

Accessibility: Keyboard Navigation

Blooms: Remember

Difficulty: Medium

Learning Objective: 01-01 Explain the importance of auditing.

Topic: 01-02 Introduction: The Concept of Auditing

• The agency problem can be mitigated by ________.
• greater transparency
• a higher degree of independence
• design of contracts
• internal auditing

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: Medium

Learning Objective: 01-01 Explain the importance of auditing.

Topic: 01-05 Agency Theory and Accountability

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Chapter 01 - Introduction to Auditing 1-3

• The underlying conditions that create demand by users for reliable financial information

include the fact that ________.

• more reliable information will allow investors to calculate the rate of return on their

investment

• users are separated from accounting records by distance and time
• governments rely on such information to create tax policies
• there is a need for the expression of an opinion as to the fairness of financial statements

Accessibility: Keyboard Navigation

Blooms: Remember

Difficulty: Easy

Learning Objective: 01-02 Distinguish auditing from accounting.

Topic: 01-07 Accounting

• The auditee is the person or company ________.
• who will use the audited information
• who performs an audit
• who pays the audit fee
• whose information is being audited

Accessibility: Keyboard Navigation

Blooms: Understand

Difficulty: Easy

Learning Objective: 01-02 Distinguish auditing from accounting.

Topic: 01-08 More on Auditing

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