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Test your basic knowledge |
Auditing Vocab
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Study First
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 amount of misstatement that the auditor believes exists in the population.
Expected misstatement
Engagement quality review
Control risk
Application controls
2. Business transactions between individuals and organizations that occur without paper documents - using computers and telecommunication networks.
General controls
Sampling unit
Electronic (Internet) commerce
Substantive strategy
3. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Monetary unit sampling
Inherent risk
Analytical procedures
Tests of controls
4. A confirmation request on which the recipient fills in the amount or furnishes the information requested.
Control objective
Blank or zero-balance confirmations
Substantive tests of transactions
Materiality
5. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.
Application controls
Management letter
Audit procedures
Relevant Assertions
6. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Monetary-unit sampling
Material weakness
Control risk
ositive confirmation
7. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Unqualified audit report
Allowance for sampling risk
Tests of controls
Audit sampling
8. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Application controls
Reliance strategy
Control environment
Standards of the PCAOB
9. 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.
Engagement quality review
Application controls
Confirmation
Nonstatistical sampling
10. 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
Materiality
Control risk
Statistical sampling
Audit procedures
11. A process designed by - or under the supervision of - the company's principal executive and principal financial officers - or persons performing similar functions - and effected by the company's board of directors - management - and other personnel -
Corporate governance
Significant risk
Internal control over financial reporting
Tests of details of account balances and disclosures
12. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Audit procedures
Generally accepted auditing standards
Analytical procedures
Tests of details of account balances and disclosures
13. The process of obtaining and evaluation a direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions.
Audit evidence
Nonsampling risk
Tests of details of account balances and disclosures
Confirmation
14. The concept that an audit done in accordance with auditing standards may fail to detect a material misstatement in a client's financial statements. In an auditing context this term has been defined to mean a high - but not absolute level of assurance
Reasonable assurance
General controls
Analytical procedures
Information asymmetry
15. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.
Relevance of evidence
Recalculation
Control deficiency
Sampling unit
16. 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
Sampling risk
Substantive tests of transactions
Application controls
Attest
17. A process that assess the quality of internal control performance over time.
Allowance for sampling risk
Monitoring of controlsa
Adverse opinion
Audit risk
18. Attribute-sampling techniques used to estimaed the dollar amount of misstatement for a class of transactions or an account balance.
Analytical procedures
Monetary unit sampling
Reperformance
Generally accepted auditing standards
19. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.
Projected misstatement
Lapping
Tests of controls
Financial Statement Assertions
20. The method by which an entity's boardof directors - management - and other personnel provide reasonable assurance about the achievement of objectives in the following categories: (1) reliability of financial reporting - (2) effectiveness and efficien
Internal Control
Sampling unit
Electronic data interchange
Tolerable misstatement
21. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Assertions
Control deficiency
Assurance Services
Classical variables sampling
22. When a subsequent event disclosed in the financial statements occurs after the date of the report but before the issuance of the related financial statements - the auditor may use dual dating. The auditor may use the original date of the report excep
Other comprehensive basis of accounting
Public accounting firm
Dual dating
Assertions
23. Tests to detect errors or fraud in individual transactions.
Risk of incorrect acceptance
Reasonable assurance
Legal letter
Substantive tests of transactions
24. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.
Application controls
Internal control over financial reporting
Audit committee
ositive confirmation
25. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.
Other comprehensive basis of accounting
Information asymmetry
Illegal act
Tests of controls
26. An instance where a financial statement assertion is not in accordance with the criteria against which it is audited (e.g: GAAP). Misstatements may be classified as fraud (intentional) - other illegal acts such as noncompliance with laws and regulati
Expected misstatement
Engagement letter
Misstatement
Reliance strategy
27. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.
Disclaimer of opinion
Substantive strategy
Audit Risk
Representation letter
28. An audit inquiry sent to the client's attorneys in order to obtain or corroborate information about litifation - claims - and assessments.
Application controls
Fraud
Inspections of records and documents
Legal letter
29. 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.
Scope of the audit
Reasonable assurance
Safeguarding of Assets
Control objective
30. 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.
Control activities
Representation letter
Generally accepted accounting principles (GAAP)
Engagement quality review
31. The policies and procedures that help ensure that management's directives are carried out.
Nonstatistical sampling
Analytical procedures
Control activities
Sampling risk
32. The amount of the planning materiality that is allocated to a financial statement account.
Assertions
Tolerable misstatement
Safeguarding of Assets
Allowance for sampling risk
33. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Material Weakness
General controls
Application controls
Contingent liability
34. The auditor's independent execution of procedures or controls that were originally performed as part of other entity's internal control - either manually or through the use of CAATs.
Statistical sampling
Reperformance
Material weakness
Application controls
35. 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.
Risk of incorrect acceptance
Independence
Audit sampling
Corporate governance
36. Standards regarding the conduct of financial statement auditing for public companies. Currently - consist primarily of standards and statements established by the AICPA's Auditing Standards Board - as these statements and standards were adopted by th
Tolerable deviation rate
Statistical sampling
Expected population deviation rate
Standards of the PCAOB
37. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Nonstatistical sampling
Sampling unit
Analytical procedures
Allowance for sampling risk
38. 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.
ositive confirmation
Safeguarding of Assets
Errors
Control environment
39. The process of obtaining and evaluating direct communication from a third party in response to a request for information about a particular item affecting financial statement assertions.
Nonsampling risk
Nonstatistical sampling
Attribute sampling
Confirmation
40. Substantive tests that concentrate on the details of items contained in the account balance and disclosures.
Material weakness
Audit sampling
Auditing
Tests of details of account balances and disclosures
41. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.
Misstatement
Audit procedures
Significant deficiency
Other comprehensive basis of accounting
42. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.
Monetary-unit sampling
Material weakness
Tests of controls
Blank or zero-balance confirmations
43. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Nonsampling risk
Analytical procedures
Negative confirmation
Application controls
44. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Tests of details of account balances and disclosures
Application controls
Illegal acts
General controls
45. 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
Control environment
Control activities
Sampling risk
Reasonable assurance
46. Audit sampling that relies on the auditor's judgment to dewtermine the sample size - select the sample - and/or evaluate the results for the purpose of reaching a conclusion about the population.
Entity-level controls
Nonstatistical sampling
Control risk
Reasonable assurance
47. 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
Business risks
Reasonable assurance
Audit evidence
Risk of incorrect rejection
48. The deviation rate that the auditor expects to exist in the population.
Expected population deviation rate
Attribute sampling
Material weakness
Dual dating
49. The transmission of business transactions over telecommunication networks.
Significant account or disclosure
Electronic data interchange
Reliance strategy
ositive confirmation
50. Sampling used to estimate the proportion of a population that possesses a specified characteristic.
Attribute sampling
Independence
Inquiry
Reliance strategy