ACCT 3222 Exam 2 Key Terms questions with accurate
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detailed answers ||
Assertion - ✔✔Statement or representation, explicit or implicit, made by management regarding
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the recognition, measurement, presentation, and disclosure of items included in the financial
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statements and notes || ||
Relevant assertion - ✔✔An assertion that has a reasonable possibility of containing a material
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misstatement or misstatements that would cause the financial statements to be materially
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misstated and, therefore, has a meaningful impact on whether the account is fairly stated
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Audit program - ✔✔A listing of details of the audit procedures to be used when testing controls,
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conducting detailed substantive audit procedures, and completing the audit
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Audit evidence - ✔✔Information gathered by the auditor that is used when forming an opinion on
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the fair presentation of a client's financial statements
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Sufficient - ✔✔Refers to the quantity of audit evidence gathered
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Appropriate - ✔✔Refers to the quality of audit evidence gathered
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Relevance - ✔✔Refers to the logical connection with the assertion being tested
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Reliability - ✔✔Refers to the source, form, or nature of the audit evidence
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Accounting records - ✔✔Client's records of the initial accounting entry and supporting
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documents
, Inspection - ✔✔An evidence-gathering procedure that involves examining documents and|| || || || || || || || || ||
physical assets ||
Vouching - ✔✔A type of inspection in which auditors select transactions from a journal or ledger
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and work backward to examine the underlying source documents
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Tracing - ✔✔A type of inspection in which auditors select source document and work forward to
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follow the transaction through to recording in the journal and ledger
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Observation - ✔✔An evidence-gathering procedure that involves watching a process or || || || || || || || || || || ||
procedure being carried out by client personnel or another party || || || || || || || || ||
Inquiry - ✔✔An evidence-gathering procedure that involves asking questions verbally or in
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written form to gain an understanding of various matters throughout the audit
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External confirmation - ✔✔An audit procedure in which the auditor corresponds directly with a
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third party, either in paper or electronic form, and the third party responds directly to the auditor
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on the matters included in the confirmation
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Bank confirmation - ✔✔Correspondence between the auditors and their client's bank requesting
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information such as cash held in the bank and details of any loans with the bank and interest rates
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charged
Receivable confirmation - ✔✔Correspondence sent directly by the auditors to their client's|| || || || || || || || || || || ||
customers requesting information about amounts owed to the client by the customer
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Positive confirmation - ✔✔Correspondence sent directly by an auditor to a third party, who is
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asked to respond to the auditor on the matters included in the letter in all circumstances, or
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whether they agree or disagree with the information included in the letter
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detailed answers ||
Assertion - ✔✔Statement or representation, explicit or implicit, made by management regarding
|| || || || || || || || || || || ||
the recognition, measurement, presentation, and disclosure of items included in the financial
|| || || || || || || || || || || ||
statements and notes || ||
Relevant assertion - ✔✔An assertion that has a reasonable possibility of containing a material
|| || || || || || || || || || || || || ||
misstatement or misstatements that would cause the financial statements to be materially
|| || || || || || || || || || || ||
misstated and, therefore, has a meaningful impact on whether the account is fairly stated
|| || || || || || || || || || || || ||
Audit program - ✔✔A listing of details of the audit procedures to be used when testing controls,
|| || || || || || || || || || || || || || || || ||
conducting detailed substantive audit procedures, and completing the audit
|| || || || || || || ||
Audit evidence - ✔✔Information gathered by the auditor that is used when forming an opinion on
|| || || || || || || || || || || || || || ||
the fair presentation of a client's financial statements
|| || || || || || || ||
Sufficient - ✔✔Refers to the quantity of audit evidence gathered
|| || || || || || || || ||
Appropriate - ✔✔Refers to the quality of audit evidence gathered
|| || || || || || || || ||
Relevance - ✔✔Refers to the logical connection with the assertion being tested
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Reliability - ✔✔Refers to the source, form, or nature of the audit evidence
|| || || || || || || || || || || ||
Accounting records - ✔✔Client's records of the initial accounting entry and supporting
|| || || || || || || || || || || ||
documents
, Inspection - ✔✔An evidence-gathering procedure that involves examining documents and|| || || || || || || || || ||
physical assets ||
Vouching - ✔✔A type of inspection in which auditors select transactions from a journal or ledger
|| || || || || || || || || || || || || || || ||
and work backward to examine the underlying source documents
|| || || || || || || ||
Tracing - ✔✔A type of inspection in which auditors select source document and work forward to
|| || || || || || || || || || || || || || || ||
follow the transaction through to recording in the journal and ledger
|| || || || || || || || || ||
Observation - ✔✔An evidence-gathering procedure that involves watching a process or || || || || || || || || || || ||
procedure being carried out by client personnel or another party || || || || || || || || ||
Inquiry - ✔✔An evidence-gathering procedure that involves asking questions verbally or in
|| || || || || || || || || || || ||
written form to gain an understanding of various matters throughout the audit
|| || || || || || || || || || ||
External confirmation - ✔✔An audit procedure in which the auditor corresponds directly with a
|| || || || || || || || || || || || || ||
third party, either in paper or electronic form, and the third party responds directly to the auditor
|| || || || || || || || || || || || || || || || ||
on the matters included in the confirmation
|| || || || || ||
Bank confirmation - ✔✔Correspondence between the auditors and their client's bank requesting
|| || || || || || || || || || || ||
information such as cash held in the bank and details of any loans with the bank and interest rates
|| || || || || || || || || || || || || || || || || || ||
charged
Receivable confirmation - ✔✔Correspondence sent directly by the auditors to their client's|| || || || || || || || || || || ||
customers requesting information about amounts owed to the client by the customer
|| || || || || || || || || || ||
Positive confirmation - ✔✔Correspondence sent directly by an auditor to a third party, who is
|| || || || || || || || || || || || || || ||
asked to respond to the auditor on the matters included in the letter in all circumstances, or
|| || || || || || || || || || || || || || || || ||
whether they agree or disagree with the information included in the letter
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