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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. All the information used by the auditor in arriving at the conclusions on which the audit opinion is based - and includes the information contained in the accounting records underlying the financial statements and other information such as minutes of
Business processes
Audit evidence
Internal control over financial reporting
Audit sampling
2. A violation of laws or governmental regulations.
Illegal act
Safeguarding of Assets
Monitoring of controlsa
Allowance for sampling risk
3. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.
Lapping
Engagement letter
General controls
Board of directors
4. 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.
Control risk
Nonstatistical sampling
Materiality
Substantive strategy
5. A risk of material misstatement that is important enough to require special audit consideration.
Significant risk
Analytical procedures
Electronic data interchange
Control risk
6. 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 -
Inspections of tangible assets
Attribute sampling
Internal control over financial reporting
Statistical sampling
7. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Observation
Significant risk
Attribute sampling
8. A financial statement assertion that has a reasonable possibility of containing a misstatement or misstatements that would cause financial statements to be materially misstated.
Inspections of tangible assets
Relevant Assertions
Public accounting firm
Engagement letter
9. 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
ateriality
Audit committee
Reliance strategy
10. The deviation rate that the auditor expects to exist in the population.
Attribute sampling
Audit sampling
Expected population deviation rate
Unqualified audit report
11. Consulting services that may provide advice and assistance concerning an entity's organization - personnel - finances - operations - systems - or other activities
Board of directors
Standards of the PCAOB
Subsequent event
Management advisory services
12. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Application controls
Computer-assisted audit techniques (CAATs)
Assertions
Monitoring of controls
13. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Control risk
Closest reasonable estimate
Representation letter
Application controls
14. Refers to the nature - timing - and extent of audit procedures - when nature refers to the type of evidence; timing refers to when the evidence will be gathered; and extent refers to how much of the type of evidence will be evaluated.
Scope of the audit
Blank or zero-balance confirmations
Tolerable misstatement
Scope limitation
15. 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
Subsequent event
Dual dating
Internal Control
Tests of controls
16. 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.
Qualified opinion
Engagement risk
Control deficiency
Material weakness
17. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Reliability of evidence
General controls
Attest
Confirmation
18. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
General controls
Tests of controls
Tolerable misstatement
Internal Control
19. Attribute sampling techniques used to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Walkthrough
Monetary-unit sampling
Upper misstatement limit
Analytical procedures
20. The policies and procedures that help ensure that management's directives are carried out.
Control activities
Assertions
Integrated audit
Projected misstatement
21. 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
Classical variables sampling
Engagement quality review
Tests of controls
22. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
Management advisory services
Fraud
Reliance strategy
Audit Evidence
23. 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
Unqualified opinion
Electronic (Internet) commerce
Control deficiency
Illegal acts
24. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Sampling risk
Reliance strategy
Other information
25. The auditor's decision to rely on the entity's controls - test those controls - and reduce the direct tests of the financial statement accounts.
Statements on Auditing Standards
Reliance strategy
Audit documentation (working papers)
Materiality
26. A transaction being traced by an auditor from origination through the entity's information system until it is reflected in the entity's financial reports; it encompasses the entire process of initiating - authorizing - recording - processing - and re
Financial statement assertions
Auditing
Risk of incorrect acceptance
Walkthrough
27. A range of acceptable amounts or a precisely determined point estimate for an estimate (eg. uncollectible receivables) - if that is a better estimate than any other amount
Analytical procedures
Significant deficiency
Control activities
Closest reasonable estimate
28. 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
Tests of details of account balances and disclosures
Control deficiency
Significant deficiency
Engagement risk
29. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.
Control deficiency
Integrated audit
Audit sampling
Risk of incorrect acceptance
30. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Engagement letter
General controls
Misstatement
Risk of material misstatement
31. 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
Errors
Substantive strategy
Audit procedures
Management letter
32. Ten broad statements guiding the conduct of financial statement auditing.
Standards of the PCAOB
Monetary unit sampling
Internal control
Generally accepted auditing standards (GAAS)
33. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.
Other comprehensive basis of accounting
Control risk
Substantive procedures
Confirmation
34. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data
ositive confirmation
Observation
Tests of details of account balances and disclosures
Analytical procedures
35. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Reliance strategy
Allowance for sampling risk
Substantive strategy
Audit committee
36. 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.
Relevance of evidence
Contingent liability
Independence
Control deficiency
37. The individual member of the population being sampled.
Audit procedures
Errors
Substantive strategy
Sampling unit
38. Violations of laws or government regulations.
Inherent risk
Illegal acts
Positive confirmation
Adverse opinion
39. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Significant account or disclosure
Assurance Services
Control risk
Nonstatistical sampling
40. Computer programs that allow auditors to test computer files and databases.
Nonstatistical sampling
Computer-assisted audit techniques (CAATs)
Fraud
Application controls
41. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Tests of controls
Statistical sampling
Reliance strategy
Business risks
42. 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 risk
Control environment
Audit Evidence
Control risk
43. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Audit procedures
Unqualified audit report
Analytical procedures
Control risk
44. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Tests of details of account balances and disclosures
Subsequent event
Audit documentation (working papers)
Relevant Assertions
45. The relevance of audit evidence refers to its relationship to the assertion or to the objective of the control being tested.
Safeguarding of Assets
Illegal acts
Substantive strategy
Relevance of evidence
46. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Projected misstatement
Audit sampling
Relevance of evidence
47. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Illegal act
Control risk
Entity-level controls
Expected misstatement
48. Unintentional misstatements or omissions of amounts or disclosures.
Errors
Analytical procedures
Other information
Control activities
49. Tests to detect errors or fraud in individual transactions.
Errors
Substantive tests of transactions
Risk of incorrect acceptance
Engagement risk
50. The extrapolation of sample results to the population; represents the auditors 'best estimate' of the misstatement in the sampling population
Monetary unit sampling
Projected misstatement
Assertions
Tests of controls
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