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Test your basic knowledge |
Auditing Vocab
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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. A confirmation request on which the recipient fills in the amount or furnishes the information requested.
Nonstatistical sampling
Control activities
Blank or zero-balance confirmations
Substantive tests of transactions
2. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Classical variables sampling
Sampling risk
Assertions
Scope limitation
3. The process of covering a cash shortage by applying cash from one customer's accounts receivable against another customer's accounts receivable.
Lapping
Information asymmetry
Tolerable deviation rate
Monitoring of controlsa
4. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Assertions
Tests of details of account balances and disclosures
Sampling unit
Reliance strategy
5. A system or code of conduct based on moral duties and obligations that indicates how an individual should behave.
Other information
Ethics
Sampling unit
Analytical procedures
6. An audit of both financial statements and internal control over financial reporting - provided by the external auditor. Required for public companies.
Monitoring of controlsa
Integrated audit
Substantive strategy
Board of directors
7. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR
Remediation
Relevant Assertions
Illegal act
Application controls
8. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Materiality
Analytical procedures
Reliance strategy
Recalculation
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
General controls
Substantive tests of transactions
Internal control
10. 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
Internal Control
Computer-assisted audit techniques (CAATs)
Observation
Significant deficiency
11. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Material Weakness
Significant deficiency
Representation letter
Internal Control
12. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Nonsampling risk
Assertions
Nonsampling risk
Classical variables sampling
13. 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
Closest reasonable estimate
Monitoring of controlsa
Safeguarding of Assets
Confirmation
14. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.
Blank or zero-balance confirmations
Substantive strategy
Risk assessment
Confidence bound
15. 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
Projected misstatement
Materiality
Sampling unit
Safeguarding of Assets
16. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data
Negative confirmation
Inspections of records and documents
Analytical procedures
Classical variables sampling
17. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
General controls
Significant risk
Recalculation
Tolerable deviation rate
18. Ten broad statements guiding the conduct of financial statement auditing.
Generally accepted auditing standards (GAAS)
Information asymmetry
Working papers
Other information
19. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Application controls
Errors
Other comprehensive basis of accounting
Expected population deviation rate
20. The policies and procedures that help ensure that management's directives are carried out.
Reliance strategy
Control activities
Risk of incorrect acceptance
Statements on Auditing Standards
21. 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.
Contingent liability
Confirmation
Generally accepted auditing standards
Tests of details of account balances and disclosures
22. 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.
Contingent liability
Electronic (Internet) commerce
Upper misstatement limit
Tolerable misstatement
23. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.
Sampling unit
Working papers
Tolerable deviation rate
Tests of controls
24. A risk of material misstatement that is important enough to require special audit consideration.
Control risk
General controls
Audit procedures
Significant risk
25. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Reasonable assurance
Allowance for sampling risk
Confidence bound
Tests of controls
26. The risk that the auditor may unknowingly fail to appropriately modify the opinion on materially misstated financial statements.
Significant deficiency
General controls
Risk of inccorect rejection
Audit risk
27. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.
Substantive procedures
Substantive tests of transactions
Substantive strategy
Material Weakness
28. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Unqualified opinion
Misstatement
Tests of details of account balances and disclosures
Analytical procedures
29. Determination of the mathematical accuracy of documents or records.
Recalculation
Substantive tests of transactions
Representation letter
Closest reasonable estimate
30. The transmission of business transactions over telecommunication networks.
Significant deficiency
Electronic data interchange
Reperformance
Business risks
31. Expressed or implied representations by management that are reflected in the financial statement components.
Audit Risk
Confirmation
Material Weakness
Assertions
32. 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.
Audit sampling
Nonstatistical sampling
Reliability of evidence
Control activities
33. 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
Internal Control
Observation
Application controls
Statements on Auditing Standards
34. 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.
Audit procedures
Significant deficiency
Tolerable deviation rate
Material weakness
35. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Substantive procedures
Substantive tests of transactions
Control risk
Assurance Services
36. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Relevance of evidence
Positive confirmation
Analytical procedures
Computer-assisted audit techniques (CAATs)
37. 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.
Materiality
Engagement risk
Upper misstatement limit
Control risk
38. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Fraud
Positive confirmation
Relevance of evidence
Application controls
39. A process that assesses the quality of internal control performance over time.
Monitoring of controls
Blank or zero-balance confirmations
Application controls
Analytical procedures
40. Financial statements prepared under regulatory - tax - cash basis - or other definitive criteria having substantial support.
Risk of material misstatement
General controls
Fraud
Other comprehensive basis of accounting
41. 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.
Corporate governance
Working papers
Control environment
Confirmation
42. 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
Other comprehensive basis of accounting
Corporate governance
Material Weakness
43. An account or disclosure is significant if there is a reasonable possibility that the account or disclosure could contain a misstatement that - individually or when aggregated with others - has a material effect on the financial statements - consider
Assertions
Other information
Financial Statement Assertions
Significant account or disclosure
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.
Observation
Tolerable misstatement
Reliance strategy
General controls
45. A weakness in the design or operation of a control such that management or employeesm in the normal course of performing their assigned functions - fail to prevent - or detect misstatements on a timely basis.
Risk assessment
Control deficiency
Financial Statement Assertions
Tests of controls
46. Controls that have a pervasive effect on the entity's system of internal control such as controls related to the control environment; controls over management override; the company's risk assessment process; centralized processing and controls - incl
Statistical sampling
Entity-level controls
Monitoring of controls
Risk assessment
47. 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
Dual-purpose tests
Significant risk
Tolerable misstatement
Standards of the PCAOB
48. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.
Risk assessment
Tolerable misstatement
Significant deficiency
Classical variables sampling
49. 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
Substantive procedures
Risk of incorrect acceptance
Risk of incorrect acceptance
Auditing
50. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Reperformance
General controls
Business processes
Subsequent event