B) capture and record all economic transactions of the organization
C) ensure compliance with policy and procedures; offer recommendations for improvement of internal controls
D) address a specific question/issue
Answer: A
Explanation: A) The purpose of the external auditor is to form and express an opinion as to whether the organization's financial statements, taken as a whole, reflect its financial position on a given date and the results of its operations for a given period.
Diff: 2
LO: 1-3
AACSB: Analytical Thinking
27) Which of the following defines the term deductive reasoning?
A) It is defined as reasoning from the general to the specific.
B) It is defined as reasoning from a logically valid conclusion to the premises.
C) It is defined as generalizing results to arrive at a valid conclusion.
D) It is defined as reasoning from particular facts to general conclusions.
Answer: A
Explanation: A) Deductive reasoning is defined as "reasoning from the general to the specific, or from the premises to a logically valid conclusion."
Diff: 1
LO: 1-4
AACSB: Analytical Thinking
28) Which of the following is a process flowing from a set of specific observations, facts, or data to a working hypothesis and then a general conclusion?
A) intuitive reasoning
B) inductive reasoning
C) deductive reasoning
D) critical reasoning
Answer: B
Explanation: B) In contrast to deductive reasoning, inductive reasoning draws conclusions from patterns. The inductive reasoning process flows from a set of specific observations, facts, or data to a working hypothesis and then a general conclusion (that is, bottom up).
Diff: 1
LO: 1-4
AACSB: Analytical Thinking
29) All kids like Jelly Bean. Sam is a kid. Therefore, we can conclude that Sam likes Jelly Bean. Which type of reasoning does this indicate?
A) intuitive reasoning
B) inductive reasoning
C) deductive reasoning
D) critical reasoning
Answer: C
Explanation: C) Deductive reasoning is defined as "reasoning from the general to the specific, or from the premises to a logically valid conclusion." In other words, identify two or more general premises (either known or assumed to be true) and then apply these accepted truths to a specific situation. The major premise is "All kids like Jelly bean." The minor premise is "Sam is a kid." The conclusion is "Sam likes Jelly bean."
Diff: 2
LO: 1-4
AACSB: Reflective Thinking
30) All clouds are white. Some clouds are round. Which of the following can be concluded using deductive reasoning?
A) Some clouds are white.
B) No conclusion can be obtained.
C) White clouds are round.
D) Round clouds are white.
Answer: D
Explanation: D) In deductive reasoning, identify two or more general premises and then apply these accepted truths to a specific situation. The major premise is "All clouds are white." The minor premise is "Some clouds are round." Since all clouds are white, it can be concluded that round clouds are also white.
Diff: 2
LO: 1-4
AACSB: Reflective Thinking
31) All birds have wings. Kiwis have wings. Which of the following can be concluded using deductive reasoning?
A) Kiwis are birds.
B) No conclusion can be obtained.
C) All birds are Kiwis.
D) Kiwis can fly.
Answer: B
Explanation: B) In deductive reasoning, identify two or more general premises (either known or assumed to be true) and then apply these accepted truths to a specific situation. In this case, the major premise is "All birds have wings." However, this does not mean that all winged creatures are birds. Hence, the minor premise "Kiwis have wings" cannot lead to the conclusion that kiwis are birds.