AUD CPA Glossary UPDATED ACTUAL
Exam Questions and CORRECT Answers
Account Balances - CORRECT ANSWER - One of three categories of financial statement
assertions, relating primarily to assets, liabilities, and equity interests.
Accounting Estimate - CORRECT ANSWER - An approximation of a financial statement
element, item, or account used because data either is not readily available or is dependent upon
the outcome of future events.
Accounts Payable Confirmation - CORRECT ANSWER - A request for independent
verification of payables.
Accounts Receivable Confirmation - CORRECT ANSWER - A request for independent
verification of receivables. Note that confirming accounts receivable is a required, generally
accepted auditing producre.
Accuracy - CORRECT ANSWER - A financial statement assertion in the "transactions
and events" category indicating that amounts and other data relating to recorded transactions and
events have been recorded properly.
Accuracy and Valuation - CORRECT ANSWER - A financial statement assertion in the
"presentation and disclosure" category indicating that financial and other information are
disclosed fairly and at appropriate amounts.
Activity Ratio - CORRECT ANSWER - A ratio that measures how effectively an
enterprise is using its assets.
Adverse Opinion - CORRECT ANSWER - An auditor's report stating that the financial
statements "do not present fairly..."
, Aging Schedule - CORRECT ANSWER - A listing of accounts receivable categorized by
age (i.e., current, 30 to 60 days, 60 to 90 days, etc.).
Agreed-upon Procedures - CORRECT ANSWER - An engagement in which a practitioner
is engaged to issue a report of findings based on specific agreed-upon procedures.
AICPA Code of Professional Conduct - CORRECT ANSWER - Guidelines for the
behavior of members of the American Institute of Certified Public Accountants (AICPA) in the
conduct of their professional affairs.
Allowance for Sampling Risk - CORRECT ANSWER - In sampling, a "cushion" for
protection against undetected deviations that is added to the sample deviation rate to arrive at the
upper deviation rate.
Analyst - CORRECT ANSWER - An IT (Information Technology) department employee
who determines system requirements and designs a processing system to meet those
requirements.
Analytical Procedures - CORRECT ANSWER - Evaluations of financial information
made by a study of plausible relationships among both financial and nonfinancial data.
Applicable Financial Reporting Framework - CORRECT ANSWER - The financial
reporting framework that is acceptable in view of the nature of the entity and the objective of the
financial statements, or that is required by law or regulation.
Application Controls - CORRECT ANSWER - Information processing controls that apply
to the processing of individual "applications" (e.g., controls surrounding receivables, controls
surrounding payroll, etc.).
Appropriate (Appropriateness of Audit Evidence) - CORRECT ANSWER - The quality of
being both reliable (valid, factual, objective, and supportable) and relevant (related to the
financial statement assertion under consideration).
Exam Questions and CORRECT Answers
Account Balances - CORRECT ANSWER - One of three categories of financial statement
assertions, relating primarily to assets, liabilities, and equity interests.
Accounting Estimate - CORRECT ANSWER - An approximation of a financial statement
element, item, or account used because data either is not readily available or is dependent upon
the outcome of future events.
Accounts Payable Confirmation - CORRECT ANSWER - A request for independent
verification of payables.
Accounts Receivable Confirmation - CORRECT ANSWER - A request for independent
verification of receivables. Note that confirming accounts receivable is a required, generally
accepted auditing producre.
Accuracy - CORRECT ANSWER - A financial statement assertion in the "transactions
and events" category indicating that amounts and other data relating to recorded transactions and
events have been recorded properly.
Accuracy and Valuation - CORRECT ANSWER - A financial statement assertion in the
"presentation and disclosure" category indicating that financial and other information are
disclosed fairly and at appropriate amounts.
Activity Ratio - CORRECT ANSWER - A ratio that measures how effectively an
enterprise is using its assets.
Adverse Opinion - CORRECT ANSWER - An auditor's report stating that the financial
statements "do not present fairly..."
, Aging Schedule - CORRECT ANSWER - A listing of accounts receivable categorized by
age (i.e., current, 30 to 60 days, 60 to 90 days, etc.).
Agreed-upon Procedures - CORRECT ANSWER - An engagement in which a practitioner
is engaged to issue a report of findings based on specific agreed-upon procedures.
AICPA Code of Professional Conduct - CORRECT ANSWER - Guidelines for the
behavior of members of the American Institute of Certified Public Accountants (AICPA) in the
conduct of their professional affairs.
Allowance for Sampling Risk - CORRECT ANSWER - In sampling, a "cushion" for
protection against undetected deviations that is added to the sample deviation rate to arrive at the
upper deviation rate.
Analyst - CORRECT ANSWER - An IT (Information Technology) department employee
who determines system requirements and designs a processing system to meet those
requirements.
Analytical Procedures - CORRECT ANSWER - Evaluations of financial information
made by a study of plausible relationships among both financial and nonfinancial data.
Applicable Financial Reporting Framework - CORRECT ANSWER - The financial
reporting framework that is acceptable in view of the nature of the entity and the objective of the
financial statements, or that is required by law or regulation.
Application Controls - CORRECT ANSWER - Information processing controls that apply
to the processing of individual "applications" (e.g., controls surrounding receivables, controls
surrounding payroll, etc.).
Appropriate (Appropriateness of Audit Evidence) - CORRECT ANSWER - The quality of
being both reliable (valid, factual, objective, and supportable) and relevant (related to the
financial statement assertion under consideration).
