Auditing, 12e (Arens)
Chapter 1 The Demand for an Auditing and Assurance Profession

1.1 Identify the components of an audit and explain why there is a demand for audits

1) Which of the following illustrates the definition of auditing with respect to the evidence analysis process?
A) accumulation and evaluation of evidence about balance sheet accounts
B) learning about different types of computing technology, such as mainframes
C) writing an operational audit report that is tailored to the client's situation
D) making sure that the auditor is competent and understands evidence gathering
Answer: A
Diff: 1 Type: MC Page Ref: 5
Learning Obj.: 1-1 Identify the components of an audit and explain why there is a demand for
B) standard personal and corporate tax preparation software.
C) the Income Tax Act and accompanying regulations.
D) database management software for the use of client based research.
Answer: C
Diff: 1 Type: MC Page Ref: 6
Learning Obj.: 1-1 Identify the components of an audit and explain why there is a demand for audits

14) In the audit of an individual's tax return, the criteria used would be
A) an accounting framework.
B) the Income Tax Act.
C) the client's policies for taxable income.
D) the auditor's judgment.
Answer: B
Diff: 2 Type: MC Page Ref: 6
Learning Obj.: 1-1 Identify the components of an audit and explain why there is a demand for audits
15) In the audit of a corporate tax return, the report provided by the Canada Revenue Agency auditor would describe
A) an opinion on the likelihood of tax return error.
B) the likely accounting errors that could contribute to tax errors.
C) management issues with respect to accurately reporting taxes.
D) corporate income tax overages or income tax under payments.
Answer: D
Diff: 2 Type: MC Page Ref: 6
Learning Obj.: 1-1 Identify the components of an audit and explain why there is a demand for audits

16) Joe is recording sales transactions in the