ACCT 3222 Exam 2 Key Terms Quizzes Exam
With Complete Solutions Graded A+
QUESTIONS AND ANSWERS
Assertion. ANSWER -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. ANSWER -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. ANSWER -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. ANSWER -Information gathered by the auditor that is used when forming
an opinion on the fair presentation of a client's financial statements
Sufficient. ANSWER -Refers to the quantity of audit evidence gathered
Appropriate. ANSWER -Refers to the quality of audit evidence gathered
Relevance. ANSWER -Refers to the logical connection with the assertion being tested
Reliability. ANSWER -Refers to the source, form, or nature of the audit evidence
Accounting records. ANSWER -Client's records of the initial accounting entry and
supporting documents
Inspection. ANSWER -An evidence-gathering procedure that involves examining
documents and physical assets
, Vouching. ANSWER -A type of inspection in which auditors select transactions from a
journal or ledger and work backward to examine the underlying source documents
Tracing. ANSWER -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. ANSWER -An evidence-gathering procedure that involves watching a
process or procedure being carried out by client personnel or another party
Inquiry. ANSWER -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. ANSWER -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. ANSWER -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. ANSWER -Correspondence sent directly by the auditors to their
client's customers requesting information about amounts owed to the client by the customer
Positive confirmation. ANSWER -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
Negative confirmation. ANSWER -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 only if the
party disagrees with the information provided
Recalculation. ANSWER -An audit procedure that involves checking the mathematical
accuracy of documents or records
With Complete Solutions Graded A+
QUESTIONS AND ANSWERS
Assertion. ANSWER -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. ANSWER -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. ANSWER -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. ANSWER -Information gathered by the auditor that is used when forming
an opinion on the fair presentation of a client's financial statements
Sufficient. ANSWER -Refers to the quantity of audit evidence gathered
Appropriate. ANSWER -Refers to the quality of audit evidence gathered
Relevance. ANSWER -Refers to the logical connection with the assertion being tested
Reliability. ANSWER -Refers to the source, form, or nature of the audit evidence
Accounting records. ANSWER -Client's records of the initial accounting entry and
supporting documents
Inspection. ANSWER -An evidence-gathering procedure that involves examining
documents and physical assets
, Vouching. ANSWER -A type of inspection in which auditors select transactions from a
journal or ledger and work backward to examine the underlying source documents
Tracing. ANSWER -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. ANSWER -An evidence-gathering procedure that involves watching a
process or procedure being carried out by client personnel or another party
Inquiry. ANSWER -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. ANSWER -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. ANSWER -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. ANSWER -Correspondence sent directly by the auditors to their
client's customers requesting information about amounts owed to the client by the customer
Positive confirmation. ANSWER -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
Negative confirmation. ANSWER -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 only if the
party disagrees with the information provided
Recalculation. ANSWER -An audit procedure that involves checking the mathematical
accuracy of documents or records
