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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. Standards against which the quality of the auditor's performance is measured.
Reliance strategy
Audit strategy
Nonsampling risk
Generally accepted auditing standards
2. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.
Electronic (Internet) commerce
Risk of incorrect rejection
Ethics
Scope of the audit
3. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Assertions
Negative confirmation
Reperformance
Illegal acts
4. Test to detect errors or fraud in individual transactions.
Substantive tests of transactions
Significant account or disclosure
Control deficiency
Assertions
5. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Financial statement assertions
Classical variables sampling
General controls
Upper misstatement limit
6. 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
Illegal act
Projected misstatement
Dual-purpose tests
Internal Control
7. Expressed or implied representations by management that are reflected in the financial statement components
Financial statement assertions
Inspections of tangible assets
Business processes
Business risks
8. 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.
Confirmation
Accounting records
Closest reasonable estimate
Audit sampling
9. Unintentional misstatements or omissions of amounts or disclosures.
Projected misstatement
Closest reasonable estimate
Errors
Tolerable misstatement
10. Ten broad statements guiding the conduct of financial statement auditing.
Generally accepted auditing standards (GAAS)
Audit Risk
Contingent liability
Allowance for sampling risk
11. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.
Representation letter
Dual dating
Other comprehensive basis of accounting
Analytical procedures
12. A violation of laws or governmental regulations.
Audit Risk
Unqualified opinion
Illegal act
Control objective
13. 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.
Allowance for sampling risk
Audit risk
Reasonable assurance
Substantive strategy
14. The risk that the sample supports the conclusion that the recorded account balance is materially misstated when it is not materially misstated.
Risk of inccorect rejection
ateriality
Monitoring of controlsa
Audit Risk
15. The risk that the auditor is exposed to financial loss or damage to his or her professional reputation from litigation - adverse publicity - or other events arising in connection wit financial statements audited and reported on.
Engagement risk
Assertions
Attribute sampling
Management letter
16. An attitude that includes a questioning mind and a critical assessment of an audit evidence. The auditor should not assume that management is either honest or dishonest.
Safeguarding of Assets
Electronic data interchange
Lapping
Professional skepticism
17. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
Negative confirmation
Tests of details of account balances and disclosures
Audit risk
Significant deficiency
18. 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)-i.e. - a clean opinion.
Unqualified opinion
Significant risk
Control environment
Risk assessment
19. 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
Illegal act
Observation
Application controls
Auditing
20. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Audit risk
Blank or zero-balance confirmations
Control deficiency
21. 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
Analytical procedures
Misstatement
Disclaimer of opinion
Upper misstatement limit
22. 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.
Reasonable assurance
Confidence bound
Sampling risk
Fraud
23. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.
Public accounting firm
Internal control
Blank or zero-balance confirmations
General controls
24. 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.
Closest reasonable estimate
Board of directors
Tolerable misstatement
Materiality
25. Processes implemented by management to achieve entity objectives. Business processes are typically organized into the following categories: revenue - purchasing. human resource management - inventory management - and financing processes
Reliance strategy
Audit Evidence
Reliance strategy
Business processes
26. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations
General controls
Assurance Services
Blank or zero-balance confirmations
Audit sampling
27. 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.
Monetary unit sampling
General controls
Control objective
Risk of incorrect rejection
28. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Internal control over financial reporting
Sampling unit
Internal Control
Reliance strategy
29. 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
Monetary unit sampling
Application controls
Accounting records
Inquiry
30. 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
Electronic (Internet) commerce
Sampling risk
Errors
General controls
31. An objective for ICFR generally relates to a relevant financial statement assertion and states a criterion for evaluating whether the company's control procedures in a specific area provide reasonable assurance that a misstatement or omission in that
Control objective
Generally accepted auditing standards (GAAS)
Relevant Assertions
Nonstatistical sampling
32. 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.
Engagement risk
Generally accepted accounting principles (GAAP)
Audit Evidence
Confirmation
33. 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.
Tests of details of account balances and disclosures
Substantive strategy
Risk of incorrect acceptance
Control objective
34. 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
Material Weakness
Application controls
Reasonable assurance
Engagement quality review
35. A risk of material misstatement that is important enough to require special audit consideration.
Audit risk
Significant risk
Audit Risk
Lapping
36. The magnitude of an omission or misstatement of accounting information that - in light of surrounding circumstances - makes it probable that the judgement of a reasonable person relying on the information would have been changed or influenced.
Substantive tests of transactions
Professional skepticism
Reliability of evidence
Materiality
37. 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.
Control environment
Electronic (Internet) commerce
Tolerable misstatement
Generally accepted auditing standards (GAAS)
38. Process of watching a process or procedure being performed by others.
Ethics
General controls
Observation
General controls
39. The amount of misstatement that the auditor believes exists in the population.
Tests of details of account balances and disclosures
Control deficiency
Ethics
Expected misstatement
40. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.
Inherent risk
Unqualified audit report
Assertions
Significant deficiency
41. Business transactions between individuals and organizations that occur without paper documents - using computers and telecommunication networks.
Control objective
Financial statement assertions
ositive confirmation
Electronic (Internet) commerce
42. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Monetary-unit sampling
Internal control
Contingent liability
Application controls
43. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR
Sampling risk
Remediation
Control deficiency
Substantive strategy
44. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.
Inspections of records and documents
Generally accepted auditing standards (GAAS)
Positive confirmation
Electronic (Internet) commerce
45. 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.
Audit documentation (working papers)
Blank or zero-balance confirmations
Relevance of evidence
Nonsampling risk
46. A confirmation request on which the recipient fills in the amount or furnishes the information requested.
Inspections of records and documents
Other comprehensive basis of accounting
Blank or zero-balance confirmations
Reliance strategy
47. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Internal control over financial reporting
Independence
Application controls
Analytical procedures
48. 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.
Integrated audit
Tests of controls
Remediation
Audit sampling
49. A service when a practitioner is engaged to issue or does issue a report on a subject matter - or an assertion about subject matter - that is the responsibility of another party. Encompasses financial statement audits.
Computer-assisted audit techniques (CAATs)
General controls
Attest
Tests of controls
50. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Sampling unit
Management letter
Analytical procedures
Upper misstatement limit