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Test your basic knowledge |
Auditing Vocab
Start Test
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. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting and correcting - material misstatements at the relevant assertion level.
Board of directors
Tests of controls
Upper misstatement limit
Computer-assisted audit techniques (CAATs)
2. Seeking information of knowledgeable persons - both financial and nonfinancial - throughout the entity or outside the entity.
Inquiry
Analytical procedures
Sampling unit
Inspections of tangible assets
3. Business transactions between individuals and organizations that occur without paper documents - using computers and telecommunication networks.
Relevance of evidence
Electronic (Internet) commerce
Legal letter
Inspections of records and documents
4. Those policies and procedures that provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition - use - or disposition of the company's assets that could have a material effect on the financial statements
Tests of details of account balances and disclosures
Analytical procedures
Safeguarding of Assets
Significant deficiency
5. 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.
Material weakness
Significant deficiency
Materiality
Entity-level controls
6. 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 documentation (working papers)
Electronic (Internet) commerce
Confirmation
Qualified opinion
7. A confirmation request to which the recipient responds only if the amount or information stated is incorrect.
Unqualified opinion
Sampling unit
Tolerable misstatement
Negative confirmation
8. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.
Lapping
Internal control over financial reporting
Reporting
Tests of details of account balances and disclosures
9. The total of the projected misstatement plus the allowance for sampling risk.
Upper misstatement limit
Control risk
Relevant Assertions
Unqualified opinion
10. An event occurring between the balance sheet date and the audit report release date - Type I - Type II
Confirmation
Auditing
Substantive tests of transactions
Subsequent event
11. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.
Nonsampling risk
Audit procedures
Analytical procedures
Dual-purpose tests
12. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Analytical procedures
Analytical procedures
Positive confirmation
Negative confirmation
13. 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.
Generally accepted accounting principles (GAAP)
Sampling unit
Sampling risk
Substantive tests of transactions
14. 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
Significant risk
Allowance for sampling risk
Statements on Auditing Standards
Control deficiency
15. 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.
Significant account or disclosure
Monetary-unit sampling
Control environment
Sampling risk
16. 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.
Scope limitation
Audit committee
Tolerable deviation rate
Reperformance
17. 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.
Nonstatistical sampling
Dual-purpose tests
Tests of controls
Assertions
18. 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
Independence
Substantive tests of transactions
Material weakness
Standards of the PCAOB
19. The risk that the entity's financial statements will contain a material misstatements whether caused by error or fraud.
Analytical procedures
Significant deficiency
Risk of material misstatement
Monetary unit sampling
20. The risk that the auditor may unknowingly fail to appropriately modify his or her opinion on financial statements that are materially misstated.
Electronic (Internet) commerce
Material weakness
Reliance strategy
Audit Risk
21. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Professional skepticism
Observation
Control risk
Reliance strategy
22. 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
Statistical sampling
Analytical procedures
Information asymmetry
Assertions
23. The individual member of the population being sampled.
Relevance of evidence
Electronic (Internet) commerce
Sampling unit
Sampling risk
24. 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.
Control deficiency
Statistical sampling
Material weakness
Unqualified audit report
25. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Accounting records
Misstatement
Tests of details of account balances and disclosures
Application controls
26. 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.
Sampling risk
Control risk
Attribute sampling
Contingent liability
27. 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
Internal control over financial reporting
Control activities
Fraud
Control deficiency
28. 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
Tolerable deviation rate
Audit sampling
Accounting records
29. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Application controls
Tests of details of account balances and disclosures
Analytical procedures
Significant deficiency
30. 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
Substantive tests of transactions
Desired confidence level
Walkthrough
Audit Evidence
31. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Computer-assisted audit techniques (CAATs)
Analytical procedures
Adverse opinion
Reliance strategy
32. Test to detect errors or fraud in individual transactions.
Substantive tests of transactions
Fraud
Positive confirmation
Dual dating
33. 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
Inherent risk
Desired confidence level
Auditing
Control activities
34. 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
Audit sampling
Sampling unit
Inspections of tangible assets
Sampling risk
35. 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.
Assurance Services
Confirmation
General controls
Engagement quality review
36. 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
Inquiry
Analytical procedures
Remediation
Engagement quality review
37. 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)
Control environment
Board of directors
Attest
38. Standards against which the quality of the auditor's performance is measured.
Generally accepted auditing standards
Sampling risk
Unqualified audit report
Control risk
39. 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)
Other information
Relevant Assertions
Reporting
Working papers
40. A management letter is a report to management containing the auditors' recommendations for correcting any deficiencies disclosed by the auditors' consideration of internal control. The management letter also provides recommendations on where the comp
Sampling unit
Illegal acts
Significant risk
Management letter
41. 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.
Risk of incorrect rejection
Audit Evidence
Internal Control
Legal letter
42. 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.
Information asymmetry
Reliance strategy
Internal control over financial reporting
Reasonable assurance
43. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Substantive tests of transactions
Risk of inccorect rejection
Application controls
Reliance strategy
44. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.
Application controls
Tolerable deviation rate
Expected misstatement
Confirmation
45. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.
Electronic (Internet) commerce
Classical variables sampling
Projected misstatement
Application controls
46. 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
Assertions
Sampling risk
Control environment
Working papers
47. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.
Integrated audit
Audit procedures
Reliance strategy
Financial Statement Assertions
48. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.
Blank or zero-balance confirmations
Other comprehensive basis of accounting
Illegal acts
Assertions
49. 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
General controls
Computer-assisted audit techniques (CAATs)
Audit documentation (working papers)
Business risks
50. Process of watching a process or procedure being performed by others.
Analytical procedures
Observation
Substantive tests of transactions
Recalculation