AUDITING THEORY
Chapter 1: AUDITING: INTEGRAL TO THE ECONOMY
1. The auditor’s opinion
a. Enhances the credibility of the financial statements.
b. Is
... [Show More] an assurance as to the future viability of the entity.
c. Is an assurance as to the efficiency with which management has conducted the affairs of the
entity, but not effectiveness.
d. Certifies the correctness of the financial statements.
2. In “auditing” accounting data, the concern is with
a. Determining whether recorded information properly reflects the economic events that occurred
during the accounting period.
b. Determining if fraud has occurred.
c. Determining if taxable income has been calculated correctly.
d. Analyzing the financial information to be sure that it complies with government requirements.
3. A financial statement audit:
a. Confirms that financial statement assertion are accurate.
b. Lends credibility to the financial statements.
c. Guarantees that financial statements are presented fairly.
d. Assures that fraud had been detected.
4. Which of the following best describes the objective of an audit of financial statements?
a. To express an opinion whether the financial statements are prepared in accordance with
prescribed criteria.
b. To express an assurance as to the future viability of the entity whose financial statements are
being audited.
c. To express an assurance about the management’s efficiency or effectiveness in conducting the
operations of entity.
d. To express an opinion whether the financial statements are prepared, in all material respect, in
accordance with an identified financial reporting framework.
5. The best statement of the responsibility of the auditor with respect to audited financial
statement is:
a. The audit of the financial statements relieves management of its responsibilities
b. The auditor’s responsibility is confined to his expression of opinion about the audited financial
statements.
c. The responsibility over the financial statements rests with the management and the auditor
assumes responsibility with respect to the notes of financial statements.
d. The auditor is responsible only to his unqualified opinion but not for any other type of
opinion. [Show Less]