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WGU D215 Auditing _ Questions And Answers Tests.pdf
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8/31/24, 4:40 PMWGU D215 Auditing
Jeremiah
Terms in this set (269)
Ability of cash flow from operations to cover Measures ability to cover current debt maturities and dividends with operating cash
current debt and dividends flow.
An approximation of a monetary amount when a precise means of measurement is not
Accounting estimate
available.
Accounting records Client's records of the initial accounting entry and supporting documents.
Measures ability to meet short-term obligations with liquid assets such as cash, short-
Acid-test (quick) ratio
term investments, and receivables.
An electronic acknowledgement of a transaction by a supplier indicating goods
Advance shipping notice (ASN)
shipped, prices, and other information such as freight costs or taxes.
The threat that a CPA will not act with objectivity because the CPA's interests are
Adverse interest threat
opposed to the client's interests.
Auditors state the financial statements are not fairly presented due to a pervasively
Adverse opinion
material departure from the applicable financial reporting framework.
The threat that a CPA will promote a client's interests or position to the point that his or
Advocacy threat
her objectivity or independence is compromised.
Allowance for sampling risk (ASR) A measure of the uncertainty associated with not sampling the entire population.
Evaluations of financial information through analysis of plausible relationships among
both financial and nonfinancial data; analytical procedures also encompass such
Analytical procedures investigation, as is necessary, of identified fluctuations or relationships that are
inconsistent with other relevant information or that differ from expected values by a
significant amount.
Appropriate Refers to the quality of audit evidence gathered.
Statements or representations, explicit or implied, made by management regarding the
Assertions recognition, measurement, presentation, and disclosure of items included in the
financial statements.
Independent professional services that improve the quality of information, or its
Assurance services
context, for decision makers.
Services performed when an independent practitioner, or CPA, is engaged to issue a
Attestation services
report on subject matter that is the responsibility of another party.
A sampling technique used to reach a conclusion about a population in terms of a rate
Attribute sampling
(frequency) of occurrence.
A committee of the board of directors responsible for oversight of internal controls,
Audit committee financial reporting and disclosure in the financial statements, regulatory compliance,
and the company's independent auditors.
The science and art of discovering and analyzing patterns, identifying anomalies, and
extracting other useful information in data underlying or related to the subject matter of
Audit data analytics (ADA)
an audit through analysis, modeling, and visualization for planning and performing the
audit.
Information gathered by the auditor that is used when forming an opinion on the fair
Audit evidence
presentation of a client's financial statements.
A listing of details of the audit procedures to be used when testing controls,
Audit program
conducting detailed substantive audit procedures, and completing the audit.
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The risk that an auditor expresses an inappropriate audit opinion when the financial
Audit risk
statements are materially misstated.
The selection and evaluation of less than 100% of the population of audit relevance
such that the auditor expects the items selected (the sample) to be representative of
Audit sampling
the population and, thus, likely to provide a reasonable basis for conclusions about the
population.
Services by an independent CPA that provide financial statement users with (1) an
opinion on whether the financial statements are presented fairly, in all material respects,
Audit services in accordance with an applicable financial reporting framework and, in some cases, (2)
an opinion on the effectiveness of ICFR, which enhances the degree of confidence that
intended users can place in the financial statements.
The determination of the amount of time spent testing the client's internal controls and
Audit strategy
conducting detailed testing of transactions and account balances.
Correspondence sent directly by the auditors to their client's bank requesting
Bank confirmation information such as cash held in the bank and details of any loans with the bank and
interest rates charged.
The amount of estimated misstatement in the population, even if no misstatements are
Basic precision (BP)
detected in the sample.
An audit testing strategy that can be used to allow evidence obtained in prior audit
Benchmarking periods to support a conclusion about IT application controls in the current audit
period.
An employee assists a vendor in winning a competitive bid for a contract; employee is
Bid rigging
compensated, usually in the form of a cash payment.
A customer is billed for goods, but goods are not shipped; accounting principles have
very narrow criteria for when revenue can be recognized for a bill-and-hold
Bill-and-hold transactions transaction; the transaction must be initiated by the customer, and the customer must
have a sound economic reason for purchasing the goods and asking the seller to
continue to hold the goods.
A group that represents the shareholders and is responsible for ensuring the company
Board of directors
is being run to benefit the shareholders.
A bond trustee is usually a commercial bank or a trust company that is given fiduciary
powers by a bond issuer to enforce the terms of a bond indenture; the trustee sees that
Bond trustee
bond interest payments are made as scheduled and protects the interests of the
bondholders if the issuer defaults.
Breach of contract A binding agreement is not honored by one or more parties to a contract.
Cash earnings per share (CEPS) ratio Shows cash flow capacity of a company for each common share issued.
A sampling method that uses normal distribution theory to select a sample from a
Classical variables sampling population and evaluate the characteristics of a population based on the results of the
sample.
A covered member's parents, nondependent children, brothers and sisters, or
Close relative
stepbrothers or stepsisters.
Closing procedures Processes used by a client when finalizing the accounts for an accounting period.
The process of discovering groups (termed clusters in data science) of similar items in a
Cluster analysis set of data; items in the same group are similar, while items in different groups are not
as similar.
Common law Law based on justice, reason, and common sense, rather than on absolute rules.
Common-size analysis A comparison of account balances to a single line item.
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