D251 WGU EXAM 2 QUESTIONS AND
CORRECT ANSWERS!!
Why might industry and client data not be directly comparable?
Use of different accounting principles.
What does haphazard selection in attributes testing involve?
An arbitrary selection with no conscious bias.
Why are the principles of lower of cost or market and potential obsolescence of inventory
concerns for auditors?
They are an inherent component of complexity related to valuation.
What should an auditor do with individually immaterial misstatements detected during an
audit?
Accumulate all known and projected misstatements to determine if the impact is material in the
aggregate.
What is NOT a reason why inventory is complex in accounting and auditing?
Easily transportable.
What should an auditor do when there is a restriction on the scope of the ICFR
engagement?
The auditor will either withdraw from the engagement or disclaim an opinion.
What are the limitations of using the MUS sampling method?
MUS is not useful in testing for understatement, zero and negative amounts, or if numerous
misstatements are expected.
In which situations is attributes sampling used?
Testing rates of deviations of controls and testing the reasonableness of account balances.
What is the principle of lower of cost or market concerned with?
, Valuation of inventory.
What is the impact of an employee strike on a company's financial health?
It may lead to adverse key financial ratios due to halted operations.
What does the term 'kiting' refer to in auditing?
A fraudulent practice involving the manipulation of bank accounts.
What is the purpose of an auditor's opinion in the audit report?
To express the auditor's view on the fairness of the financial statements.
What does the term 'lapping of accounts receivable' refer to?
A fraudulent scheme where payments from one customer are misapplied to another customer's
account.
What is the significance of the cutoff test in auditing?
It ensures that sales are recorded in the correct accounting period.
What is the role of data analytics tools in auditing?
To analyze data for insights, but not to perform basic tasks like footing a file.
What is the potential consequence of misstatements that are considered immaterial?
They may still need to be accumulated to assess their aggregate impact.
What is a common challenge in auditing inventory?
The diversity of items in inventory and applying the lower of cost or market principle.
What does the auditor do if they encounter limitations during an ICFR engagement?
They may need to withdraw or disclaim an opinion.
What is the purpose of attributes sampling in auditing?
To assess the effectiveness of internal controls.
What is the date of the audit opinion for Upton Industries, Inc. except for Note D?
CORRECT ANSWERS!!
Why might industry and client data not be directly comparable?
Use of different accounting principles.
What does haphazard selection in attributes testing involve?
An arbitrary selection with no conscious bias.
Why are the principles of lower of cost or market and potential obsolescence of inventory
concerns for auditors?
They are an inherent component of complexity related to valuation.
What should an auditor do with individually immaterial misstatements detected during an
audit?
Accumulate all known and projected misstatements to determine if the impact is material in the
aggregate.
What is NOT a reason why inventory is complex in accounting and auditing?
Easily transportable.
What should an auditor do when there is a restriction on the scope of the ICFR
engagement?
The auditor will either withdraw from the engagement or disclaim an opinion.
What are the limitations of using the MUS sampling method?
MUS is not useful in testing for understatement, zero and negative amounts, or if numerous
misstatements are expected.
In which situations is attributes sampling used?
Testing rates of deviations of controls and testing the reasonableness of account balances.
What is the principle of lower of cost or market concerned with?
, Valuation of inventory.
What is the impact of an employee strike on a company's financial health?
It may lead to adverse key financial ratios due to halted operations.
What does the term 'kiting' refer to in auditing?
A fraudulent practice involving the manipulation of bank accounts.
What is the purpose of an auditor's opinion in the audit report?
To express the auditor's view on the fairness of the financial statements.
What does the term 'lapping of accounts receivable' refer to?
A fraudulent scheme where payments from one customer are misapplied to another customer's
account.
What is the significance of the cutoff test in auditing?
It ensures that sales are recorded in the correct accounting period.
What is the role of data analytics tools in auditing?
To analyze data for insights, but not to perform basic tasks like footing a file.
What is the potential consequence of misstatements that are considered immaterial?
They may still need to be accumulated to assess their aggregate impact.
What is a common challenge in auditing inventory?
The diversity of items in inventory and applying the lower of cost or market principle.
What does the auditor do if they encounter limitations during an ICFR engagement?
They may need to withdraw or disclaim an opinion.
What is the purpose of attributes sampling in auditing?
To assess the effectiveness of internal controls.
What is the date of the audit opinion for Upton Industries, Inc. except for Note D?
