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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. A confirmation request to which the recipient responds whether or not he or she agrees with the amount or information stated.
Classical variables sampling
Control risk
Positive confirmation
Closest reasonable estimate
2. 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.
Public accounting firm
Material weakness
Monetary unit sampling
Reasonable assurance
3. A process that assesses the quality of internal control performance over time.
Fraud
Monitoring of controls
Nonsampling risk
Illegal act
4. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Integrated audit
Classical variables sampling
Financial statement assertions
Dual-purpose tests
5. A deficiency - or combination of deficiencies - that results in a reasonable possibility that a material misstatement of the company's annual or interim financial stsatements will not be prevented or detected on a timely basis
Classical variables sampling
Tests of controls
Audit procedures
Material Weakness
6. The concept that the manager generally has more information about the true financial position and results of operations of the entity than the absentee owner does.
Reliance strategy
Monetary-unit sampling
Information asymmetry
Audit documentation (working papers)
7. 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)
Monitoring of controlsa
Reporting
Substantive tests of transactions
Nonstatistical sampling
8. A deficiency - or combination of deficiencies - in internal control - such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented - or detected and corrected - on a timely basis.
Remediation
Management letter
Material weakness
Internal Control
9. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Relevant Assertions
Classical variables sampling
Control risk
Risk of inccorect rejection
10. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Monitoring of controlsa
Material weakness
Application controls
Significant deficiency
11. The amount of the planning materiality that is allocated to a financial statement account.
Adverse opinion
Audit committee
Tolerable misstatement
Lapping
12. Unintentional misstatements or omissions of amounts or disclosures.
Recalculation
Errors
Upper misstatement limit
Representation letter
13. 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
Closest reasonable estimate
Business processes
Internal Control
14. Computer programs that allow auditors to test computer files and databases.
Accounting records
Representation letter
Computer-assisted audit techniques (CAATs)
Sampling unit
15. Computer programs that allow auditors to test computer files and databases.
Standards of the PCAOB
Statements on Auditing Standards
Computer-assisted audit techniques (CAATs)
Tolerable misstatement
16. A letter that corroborates oral representations made to the auditor by management or by other auditors and documents the continued appropriateness of such representations.
Fraud
Standards of the PCAOB
Computer-assisted audit techniques (CAATs)
Representation letter
17. 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
Significant deficiency
Analytical procedures
Illegal acts
Tests of details of account balances and disclosures
18. A letter that formalizes the contract between the auditor and the client and outlines the responsibilities of both parties.
Detection risk
General controls
Engagement letter
Statements on Auditing Standards
19. Examination of internal or external records or documents that are in paper form - electronic form - or other media.
Inspections of records and documents
Other information
Electronic (Internet) commerce
Control risk
20. 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 committee
Internal Control
Substantive tests of transactions
Nonsampling risk
21. Expressed or implied representations by management regarding recognition - measurement - presentation - and disclosure of information in the financial statements.
Safeguarding of Assets
Assertions
Audit procedures
Audit procedures
22. 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.
Working papers
Attest
Confidence bound
Generally accepted accounting principles (GAAP)
23. Issued when auditors do not express an opinion on the fairness of the entity's financial statements. Can be issued for pervasive going-concern uncertainties - pervasive scope limitations - and situations in which the auditors are not independent.
Significant account or disclosure
Other comprehensive basis of accounting
Reasonable assurance
Disclaimer of opinion
24. A violation of laws or governmental regulations.
Electronic data interchange
Unqualified opinion
Illegal act
Analytical procedures
25. Test of transactions that both evaluate the effectiveness of controls and detect monetary errors.
Unqualified opinion
Dual-purpose tests
Control activities
Audit Risk
26. 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 controls
Negative confirmation
Errors
Risk of incorrect acceptance
27. A process that assess the quality of internal control performance over time.
Classical variables sampling
Financial Statement Assertions
Monitoring of controlsa
Standards of the PCAOB
28. Test to detect errors or fraud in individual transactions.
Tests of controls
Substantive tests of transactions
Blank or zero-balance confirmations
Reperformance
29. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR
General controls
Analytical procedures
Remediation
Audit Evidence
30. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Audit Evidence
Analytical procedures
Lapping
Sampling risk
31. An event occurring between the balance sheet date and the audit report release date - Type I - Type II
Material weakness
Control deficiency
Expected population deviation rate
Subsequent event
32. Expressed or implied representations by management that are reflected in the financial statement components
Integrated audit
Control deficiency
Audit procedures
Financial statement assertions
33. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Observation
Application controls
Dual dating
Tests of details of account balances and disclosures
34. The policies and procedures that help ensure that management's directives are carried out.
Audit risk
Illegal acts
ateriality
Control activities
35. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Analytical procedures
Application controls
Business risks
Control objective
36. 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
Desired confidence level
Engagement quality review
Accounting records
Tests of controls
37. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.
Representation letter
Confidence bound
Materiality
Application controls
38. 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) - except for a material misstatement that does no
Internal Control
Confirmation
Qualified opinion
Tests of details of account balances and disclosures
39. The total of the projected misstatement plus the allowance for sampling risk.
Qualified opinion
Upper misstatement limit
Nonstatistical sampling
Inquiry
40. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Closest reasonable estimate
Electronic (Internet) commerce
Substantive strategy
Tests of controls
41. The identification - analysis - and management of risks relevant to the preparation of financial statements that are fairly presented in conformity with GAAP.
Risk assessment
Audit procedures
Classical variables sampling
Relevance of evidence
42. 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 procedures
Analytical procedures
General controls
Audit sampling
43. The risk that material misstatements that could occur will not be prevented - or detected and corrected - by internal controls.
Control risk
Safeguarding of Assets
Monetary unit sampling
Tolerable deviation rate
44. 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
Generally accepted auditing standards (GAAS)
Nonsampling risk
Blank or zero-balance confirmations
45. The amount of the planning materiality that is allocated to a financial statement account.
Sampling unit
Tolerable misstatement
Electronic (Internet) commerce
Attribute sampling
46. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.
Application controls
Public accounting firm
Audit Evidence
Audit procedures
47. 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.
ateriality
Risk of incorrect acceptance
Allowance for sampling risk
Management advisory services
48. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Statistical sampling
Audit procedures
Analytical procedures
Substantive tests of transactions
49. Audit procedures performed to test material misstatements in an account balance - transaction class - or disclosure component of the financial statements.
Substantive procedures
Risk of incorrect rejection
Substantive strategy
Management letter
50. The maximum deviation rate from a prescribed control that the auditor is willing to accept without altering the planned assessed level of control risk.
Nonstatistical sampling
Tolerable deviation rate
Inherent risk
Management letter
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