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Auditing Vocab

Subject : business-skills
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The auditor's decision to rely on the entity's controls - test those controls - and reduce the directs test of financial statement accounts.






2. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.






3. A confirmation request on which the recipient fills in the amount or furnishes the information requested.






4. The amount of misstatement that the auditor believes exists in the population.






5. A state of objectivity in fact and in appearance - including the absence of any significant conflicts of interest.






6. The individual member of the population being sampled.






7. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based; includes the information contained in the accounting records underlying the financial statements and other information






8. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.






9. Expressed or implied representations by management that are reflected in the financial statement components.






10. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.






11. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.






12. The auditor's opinion that the financial statements present fairly - in all material respects - in accordance with generally accepted accounting principles (or other comprehensive basis of accounting) - except for a material misstatement that does no






13. Computer programs that allow auditors to test computer files and databases.






14. Risks resulting from significant conditions - events - circumstances - and actions or inactions that could adversely affect management's ability to execute its strategies and to achieve its objectives - or through the setting of inappropriate objecti






15. The application of an audit procedure to less than 100 percent of the items within an account or class of transactions for the purpose of evaluating some characteristic of the balance or class.






16. Accounting principles that are generally accepted for the preparation of financial statements in the United States. GAAP standards are currently issued primarily by the FASB - with oversight and influence by the SEC.






17. A control deficiency - or combination of control deficiencies - that adversely effects the entity's ability to initate - authorize - record - process - or report external financial data reliably in accordance with GAAP such that there is more than a






18. The risk that the sample supports the conclusion that the control is operating effectively when it is not or that the recorded account balance is not materially misstated when it is materially misstated.






19. The records of initial entries and supporting records - such as checks and records of electronic fund transfers; invoices; contracts; the general and subsidiary ledgers - journal entries - and other adjustments to the financial statements that are no






20. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.






21. Violations of laws or government regulations.






22. The amount of the planning materiality that is allocated to a financial statement account.






23. Sampling used to estimate the proportion of a population that possesses a specified characteristic.






24. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.






25. A violation of laws or governmental regulations.






26. The transmission of business transactions over telecommunication networks.






27. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data






28. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.






29. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.






30. A risk of material misstatement that is important enough to require special audit consideration.






31. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.






32. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.






33. A process that assess the quality of internal control performance over time.






34. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.






35. A 'clean' audit report - indicating the auditor's opinion that a client's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)






36. Audit sampling that relies on the auditor's judgment to determine sample size - select the sample - and/or evaluate the results for the purpose of reaching a conclusion about the population.






37. The possibility that the sample drawn is not representative of the population and that - as a result - the auditor reaches an incorrect conclusion about the reliability of the control - the account balance - or class of transactions based on the samp






38. Refers to the nature - timing - and extent of audit procedures - when nature refers to the type of evidence; timing refers to when the evidence will be gathered; and extent refers to how much of the type of evidence will be evaluated.






39. A term that implies some risk that a material misstatement could be present in the financial statements without the auditor detecting it - even when the auditor has exercised due care.






40. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.






41. Sampling that uses the laws of probability to select and evaluate the results of an audit sample - thereby permitting the auditor to quantify the sampling risk for the purpose of reaching a conclusion about the population






42. The auditor's decision not to tely on the entity's controls and to audit the related financial statement accounts by relying more on substantive procedures.






43. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.






44. The tone of an organization - which reflects the overall attitude - awareness - and actions of the board of directors - management - and owners influencing the control consciousness of its people.






45. The risk that the sample supports the conclusion that the control is not operating effectively when it actually is or that the recorded account balance is materially misstated when it is not materially misstated.






46. A process that assesses the quality of internal control performance over time.






47. Sampling that uses the laws of probability to select and evaluate the results of an audit sample - thereby permitting the auditor to quantify the sampling risk for the purpose of reaching a conclusion about the population.






48. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.






49. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.






50. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.







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