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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. The uncertainty that results from sampling; the difference between the expected mean of the population and the tolerable deviation or misstatement.
Allowance for sampling risk
Legal letter
Business processes
Control risk
2. Tests that concentrate on the details of amounts contained in an account balance and related footnotes.
Tests of details of account balances and disclosures
Fraud
Substantive strategy
Control deficiency
3. 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
Financial Statement Assertions
Control deficiency
Audit risk
Other information
4. 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.
ositive confirmation
Legal letter
Disclaimer of opinion
Material weakness
5. The policies and procedures that help ensure that management's directives are carried out.
Risk of incorrect acceptance
Control activities
Electronic (Internet) commerce
Audit evidence
6. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data
Public accounting firm
Analytical procedures
Statistical sampling
Business risks
7. 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
Assurance Services
Engagement letter
Blank or zero-balance confirmations
8. 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.
Tests of details of account balances and disclosures
Audit documentation (working papers)
Nonstatistical sampling
Independence
9. Computer programs that allow auditors to test computer files and databases.
Auditing
Computer-assisted audit techniques (CAATs)
Sampling risk
Upper misstatement limit
10. 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
Internal control over financial reporting
Risk of incorrect rejection
Accounting records
Audit documentation (working papers)
11. Business transactions between individuals and organizations that occur without paper documents - using computers and telecommunication networks.
Adverse opinion
Electronic (Internet) commerce
Materiality
Material Weakness
12. Expressed or implied representations by management regarding the recognitions - measurement - presentation - and disclosure of information in the financial statements and related disclosures.
Assertions
Illegal acts
Audit risk
Risk of incorrect rejection
13. An organization created to provide professional accounting-related services - including auditing. Usually formed as a proprietorship or as a form of partnership.
Monetary-unit sampling
Business processes
Public accounting firm
Significant deficiency
14. 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.
Confidence bound
Nonstatistical sampling
Application controls
Application controls
15. Controls that apply to the processing of specific computer applications and are part of the computer programs used in the accounting system.
Electronic (Internet) commerce
Management advisory services
Control objective
Application controls
16. 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
Electronic data interchange
Statistical sampling
Engagement letter
General controls
17. The probability that the true but unknown measure of the characteristic of interest is within specified limits.
Audit strategy
Illegal act
Expected misstatement
Desired confidence level
18. Intentional misstatements that can be classified as fraudulent financial reporting and/or misappropriation of assets.
Fraud
Reasonable assurance
Control deficiency
Dual-purpose tests
19. The auditor's decision not to rely on the entity's controls and to audit the related financial statement account by relying more on substantive procedures.
Reliance strategy
Inspections of tangible assets
Substantive strategy
Business processes
20. Papers that document the evidence gathered by auditors to show the work they have done - the methods and procedures they have followed - and the conclusions they have developed in an audit of financial statements or other type of engagement.
Unqualified opinion
Control risk
Working papers
Disclaimer of opinion
21. A process that assess the quality of internal control performance over time.
Disclaimer of opinion
Application controls
Statistical sampling
Monitoring of controlsa
22. Ten broad statements guiding the conduct of financial statement auditing.
Positive confirmation
Relevant Assertions
Financial statement assertions
Generally accepted auditing standards (GAAS)
23. Processes implemented by management to achieve entity objectives. Business processes are typically organized into the following categories: revenue - purchasing. human resource management - inventory management - and financing processes
Management advisory services
Control deficiency
Business processes
Attribute sampling
24. Tests to detect errors or fraud in individual transactions.
Generally accepted auditing standards (GAAS)
Analytical procedures
Substantive tests of transactions
Business processes
25. Unintentional misstatements or omissions of amounts or disclosures.
Application controls
Confidence bound
Professional skepticism
Errors
26. The deviation rate that the auditor expects to exist in the population.
Expected population deviation rate
Misstatement
Significant deficiency
Other comprehensive basis of accounting
27. Evaluations of financial information made by a study of plausible relationships among both financial and nonfinancial data.
Analytical procedures
Entity-level controls
Engagement letter
Lapping
28. 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)-i.e. - a clean opinion.
Recalculation
Audit Evidence
Unqualified opinion
Tolerable deviation rate
29. Audit evidence that includes minutes of meetings; confirmations from third parties; industry analysts' reports; comparable data about competitors (benchmarking); controls manuals; information obtained by the auditor from such audit procedures as inqu
Tests of details of account balances and disclosures
Assertions
Adverse opinion
Other information
30. The use of normal distribution theory to estimate the dollar amount of misstatement for a class of transactions or an account balance.
Control environment
Unqualified audit report
Classical variables sampling
Other information
31. Test to detect errors or fraud in individual transactions.
Reliability of evidence
Representation letter
Substantive tests of transactions
Projected misstatement
32. The susceptibility of an assertion to material misstatement - assuming no related controls
Management advisory services
Sampling unit
Inspections of tangible assets
Inherent risk
33. The process of correcting a material weakness as part of management's assessment of the effectiveness of ICFR
Monetary-unit sampling
Control risk
Subsequent event
Remediation
34. The method by which an entity's board of 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 efficie
Internal control
Legal letter
Nonsampling risk
Audit Evidence
35. 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
Generally accepted auditing standards
Upper misstatement limit
Audit sampling
36. 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.
Lapping
Reperformance
Representation letter
Recalculation
37. 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
Reliability of evidence
Internal control
Tolerable misstatement
38. Specific acts performed by the auditor in gathering evidence to determine if specific assertations are being met.
Upper misstatement limit
Audit procedures
Audit sampling
Inherent risk
39. Business transactions between individuals and organizations that occur without proper documents - using computers - and telecommunication networks.
Adverse opinion
Inspections of tangible assets
Electronic (Internet) commerce
Upper misstatement limit
40. 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 documentation (working papers)
Unqualified audit report
Reliance strategy
Audit sampling
41. A measure of sampling risk added and subtracted to the projected misstatement to form a confidence interval.
Confirmation
Confidence bound
Dual dating
Allowance for sampling risk
42. 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
Audit Evidence
Application controls
Internal Control
Tests of controls
43. The amount of the planning materiality that is allocated to a financial statement account.
Relevant Assertions
Tolerable misstatement
Recalculation
Entity-level controls
44. Controls that relate to the overall information processing environment and have a pervasive effect on the entity's computer operations.
Accounting records
Sampling unit
Contingent liability
General controls
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.
Generally accepted accounting principles (GAAP)
Monitoring of controlsa
Scope of the audit
Ethics
46. 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.
Computer-assisted audit techniques (CAATs)
Information asymmetry
Control activities
Nonsampling risk
47. 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.
Detection risk
Tests of controls
Disclaimer of opinion
Scope of the audit
48. Audit procedures performed to test the operating effectiveness of controls in preventing or detecting material misstatements at the relevant assertion level.
Tests of controls
Contingent liability
Engagement risk
Electronic (Internet) commerce
49. Basic unit containing the elements of the population to be sampled
Materiality
Sampling risk
Sampling unit
Illegal act
50. Specific acts performed by the auditor in gathering evidence to determine if specific assertions are met.
General controls
Audit procedures
Working papers
Application controls