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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 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.
Scope limitation
Confirmation
Inspections of tangible assets
Tests of controls
2. A risk of material misstatement that is important enough to require special audit consideration.
Monitoring of controlsa
ositive confirmation
Significant risk
Attest
3. 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.
Control deficiency
Errors
Audit sampling
Confidence bound
4. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.
Substantive tests of transactions
Computer-assisted audit techniques (CAATs)
Inquiry
Reliance strategy
5. Substantive tests that concentrate on the details of items contained in the account balance and disclosures.
Control deficiency
Analytical procedures
Tests of details of account balances and disclosures
Ethics
6. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Substantive procedures
Information asymmetry
Analytical procedures
Assertions
7. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Attribute sampling
Application controls
Reliance strategy
Errors
8. 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
Subsequent event
Control activities
Audit Evidence
Control objective
9. The total of the projected misstatement plus the allowance for sampling risk.
Upper misstatement limit
General controls
Tests of controls
Assertions
10. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population
Statements on Auditing Standards
Observation
Projected misstatement
Classical variables sampling
11. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Control risk
Audit risk
Substantive tests of transactions
Application controls
12. The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated.
Legal letter
Projected misstatement
Risk of inccorect rejection
Monetary-unit sampling
13. A deficiency in internal control exists when the design or operation of a control does not allow management or employees - in the normal course of performing their assigned functions - to prevent - or detect and correct misstatements on a timely basi
Control deficiency
Confirmation
Control risk
Observation
14. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Application controls
Audit procedures
Projected misstatement
15. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.
Audit procedures
Confirmation
Representation letter
Internal Control
16. 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.
Sampling unit
Relevance of evidence
Risk of incorrect rejection
Sampling risk
17. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Tests of details of account balances and disclosures
Sampling unit
Substantive tests of transactions
Public accounting firm
18. The auditor's decision not to rely on the entity's controls and to audit the related financial statement account by relying more on substantive procedures.
Errors
Other information
Substantive strategy
Control risk
19. Persons elected by the stockholders of a corporation to oversee management and to direct the affairs of the corporation.
Board of directors
Audit risk
Audit sampling
Business risks
20. The magnitude of an omission or misstatement of accounting information that - in light of surrounding circumstances - makes it probable that the judgment of a reasonable person relying on the information would have been changed or influenced.
ateriality
Sampling risk
General controls
Audit procedures
21. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
General controls
Negative confirmation
Closest reasonable estimate
Reliance strategy
22. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.
Substantive procedures
Confidence bound
Reliance strategy
Tests of controls
23. Examination of internal or external records or documents that are in paper form - electronic form - or other media.
Inspections of records and documents
Analytical procedures
Engagement letter
Assurance Services
24. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statements accounts.
Classical variables sampling
Business processes
Misstatement
Reliance strategy
25. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.
Control activities
Audit committee
Assertions
Audit Risk
26. The possibility that the auditor may use inappropriate audit procedures - fail to detect a misstatement when applying an audit procedure - or misinterpret an audit result.
Projected misstatement
Computer-assisted audit techniques (CAATs)
Monetary unit sampling
Nonsampling risk
27. A review of audit documentation by an additional person (normally - a partner or equivalent with the firm) who has not been involved with the audit; its purpose is to ensure that quality of the audit work and reporting is consistent with the quality
Analytical procedures
Reliability of evidence
Engagement quality review
Adverse opinion
28. A deficiency - or a combination of deficiencies - in internal control that is less severe than a material weakness - yet important enough to merit attention by those charged with governance.
Significant deficiency
Sampling risk
Confirmation
Electronic (Internet) commerce
29. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.
Statements on Auditing Standards
Application controls
Audit procedures
Other comprehensive basis of accounting
30. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Confirmation
Illegal acts
Reliance strategy
Classical variables sampling
31. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Qualified opinion
Risk of incorrect rejection
Allowance for sampling risk
Generally accepted auditing standards (GAAS)
32. 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
Control objective
Audit evidence
Accounting records
Financial statement assertions
33. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Tests of controls
Expected misstatement
Audit evidence
Confirmation
34. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Relevant Assertions
Nonsampling risk
Assertions
Other information
35. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Monetary-unit sampling
Reliance strategy
Control risk
Substantive strategy
36. The auditor's decision to rely on the entity's controls - test those controls - and reduce the directs test of financial statement accounts.
Other comprehensive basis of accounting
Reliance strategy
Audit procedures
Audit committee
37. The concept that the manager generally has more information about the true financial position and results of operations of the entity than the absentee owner does.
Significant account or disclosure
Control risk
Information asymmetry
Management letter
38. The possibility that the auditor may use inappropriate audit procedures - fail to detect a misstatement when applying an audit procedure - or misinterpret an audit result.
Nonsampling risk
Control environment
Audit procedures
Sampling risk
39. Papers that document the evidence gathered by auditors to show the work they have done - the methods and procedures they have followed - and the conclusions they have developed in an audit of financial statements or other type of engagement.
Control risk
Substantive tests of transactions
Corporate governance
Working papers
40. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Audit Evidence
Representation letter
Corporate governance
Audit committee
41. A deficiency - or combination of deficiencies - that results in a reasonable possibility that a material misstatement of the company's annual or interim financial stsatements will not be prevented or detected on a timely basis
Materiality
Scope of the audit
Material Weakness
Application controls
42. The transmission of business transactions over telecommunication networks.
Electronic data interchange
Substantive tests of transactions
Reperformance
Audit procedures
43. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Subsequent event
Tests of details of account balances and disclosures
Reperformance
Tests of controls
44. 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
Fraud
Sampling unit
Misstatement
Computer-assisted audit techniques (CAATs)
45. 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.
Analytical procedures
Sampling unit
Working papers
Nonstatistical sampling
46. Business transactions between individuals and organizations that occur without paper documents - using computers and telecommunication networks.
Projected misstatement
Other information
Sampling unit
Electronic (Internet) commerce
47. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.
Significant deficiency
Engagement letter
Analytical procedures
Tolerable misstatement
48. Ten broad statements guiding the conduct of financial statement auditing.
Analytical procedures
Material Weakness
Generally accepted auditing standards (GAAS)
Nonstatistical sampling
49. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Representation letter
Control risk
Audit Evidence
Ethics
50. A systematic process of (1) objectively obtaining an evaluating evidence regarding assertions about economic actions and events to ascertain the degree of correspondence between those assertions and established criteria and (2) communicating the resu
Significant account or disclosure
Attribute sampling
Internal Control
Auditing