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Test your basic knowledge |
Auditing Vocab
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Subject
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business-skills
Instructions:
Answer 50 questions in 15 minutes.
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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. Independent professional services that improve the quality of information - or its context - for decision makers. Encompasses attest services and financial statement audits.
Positive confirmation
Substantive tests of transactions
Lapping
Assurance Services
2. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Observation
Audit evidence
Monitoring of controlsa
3. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.
Other comprehensive basis of accounting
Public accounting firm
Fraud
Significant deficiency
4. Specific acts performed as the auditor gathers evidence to determine if specific audit objectives are being met.
Business processes
Audit procedures
Reporting
Sampling unit
5. The amount of misstatement that the auditor believes exists in the population.
Expected misstatement
Accounting records
Ethics
Material Weakness
6. 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.
Inherent risk
Significant deficiency
Significant account or disclosure
Control risk
7. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.
Dual dating
Substantive procedures
Audit documentation (working papers)
Reliance strategy
8. 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
Risk of incorrect acceptance
Significant deficiency
Standards of the PCAOB
9. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.
Substantive tests of transactions
Lapping
Computer-assisted audit techniques (CAATs)
Expected misstatement
10. 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.
General controls
Sampling unit
Public accounting firm
Nonsampling risk
11. Business transactions between individuals and organizations that occur without paper documents - using computers and telecommunication networks.
Electronic (Internet) commerce
Audit sampling
Detection risk
Entity-level controls
12. 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.
Generally accepted auditing standards
Reporting
Remediation
Confirmation
13. 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.
Confirmation
Assertions
Control risk
Materiality
14. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.
Significant deficiency
Substantive tests of transactions
Risk of material misstatement
Monitoring of controls
15. A subcommittee of the board of directors that is responsible for the financial reporting and disclosure process.
Audit committee
Remediation
Reperformance
Engagement risk
16. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.
Reporting
Relevance of evidence
Reasonable assurance
Sampling unit
17. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.
Confidence bound
Closest reasonable estimate
Sampling risk
Sampling risk
18. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Sampling risk
Blank or zero-balance confirmations
Allowance for sampling risk
Representation letter
19. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities
Audit Evidence
Inherent risk
Management advisory services
Detection risk
20. Controls that related to the overall information processing environment and have a pervasive effect on the entity's computer operations
Statements on Auditing Standards
General controls
Financial statement assertions
Reporting
21. Determination of the mathematical accuracy of documents or records.
Substantive tests of transactions
Recalculation
Illegal acts
Analytical procedures
22. Physical examination of the tangible assets.
Nonsampling risk
Representation letter
Inspections of tangible assets
Control environment
23. The diagnosticity of evidence; that is whether the type of evidence can be relied on to signal the true state of the assertion.
Standards of the PCAOB
Control activities
Classical variables sampling
Reliability of evidence
24. Standards against which the quality of the auditor's performance is measured.
Business processes
Analytical procedures
Audit strategy
Generally accepted auditing standards
25. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Audit procedures
Analytical procedures
Nonsampling risk
Significant deficiency
26. 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.
Inquiry
Fraud
Application controls
Substantive strategy
27. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Subsequent event
Analytical procedures
Tests of details of account balances and disclosures
Assurance Services
28. 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
Tests of controls
Management advisory services
Business risks
Dual dating
29. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Closest reasonable estimate
Allowance for sampling risk
Internal control over financial reporting
Legal letter
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.
Dual-purpose tests
Significant account or disclosure
Confirmation
Reliance strategy
31. 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
Reliance strategy
Materiality
Internal Control
Engagement letter
32. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.
Sampling unit
Electronic (Internet) commerce
Attribute sampling
Audit sampling
33. The deviation rate that the auditor expects to exist in the population.
Dual-purpose tests
Expected population deviation rate
General controls
Audit evidence
34. The end product of the auditor's work indicating the auditing standards followed - and expressing an opinion as to whether an entity's financial statements are fairly presented in accordance with agreed-upon criteria (eg. GAAP)
Confirmation
Reporting
Assurance Services
Analytical procedures
35. Expressed or implied representations by management about information that is reflected in the financial statements. The three sets of assertions related to ending account balances - transactions - and presentation and disclosure.
Lapping
Financial Statement Assertions
Closest reasonable estimate
Inspections of records and documents
36. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatememnt of the entity's financial statements will not be prevent - or detected and corrected on a timely basis.
Material weakness
Engagement risk
Significant account or disclosure
Nonsampling risk
37. Expressed or implied representations by management that are reflected in the financial statement components
Analytical procedures
Financial statement assertions
Reliability of evidence
Integrated audit
38. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
Observation
Internal control over financial reporting
Allowance for sampling risk
Fraud
39. A committee consisting of members of the board of directors - charged with overseeing the entity's system of internal control over financial reporting - internal and external auditors - and financial reporting process. Members typically must be indep
Audit sampling
Audit committee
Financial statement assertions
Reasonable assurance
40. Violations of laws or government regulations.
Integrated audit
Relevance of evidence
Risk of incorrect acceptance
Illegal acts
41. Existing condition or set of circumstances involving uncertainty about a possible loss that will ultimately be resolved when some future event occurs or fails to occur.
Analytical procedures
General controls
Contingent liability
Independence
42. The auditor's decision to rely on the entity's controls - test those controls - and reduce the directs test of financial statement accounts.
Reliance strategy
Statements on Auditing Standards
General controls
Confirmation
43. Tests to detect errors or fraud in individual transactions.
Illegal act
Substantive tests of transactions
Fraud
Reporting
44. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Control deficiency
Substantive tests of transactions
Application controls
Reliance strategy
45. 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.
General controls
Unqualified opinion
Control activities
Generally accepted accounting principles (GAAP)
46. 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
Engagement quality review
Reasonable assurance
Audit risk
Nonsampling risk
47. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Audit documentation (working papers)
Expected misstatement
Adverse opinion
Tests of controls
48. 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
Assertions
Illegal acts
Significant deficiency
Confirmation
49. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Observation
General controls
Upper misstatement limit
Control risk
50. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Nonsampling risk
Audit committee
Statements on Auditing Standards
Control risk
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