WGU D251 Exam Study Questions
with 100% Verified Answers
Already Graded A+
1. Performance Materiality is also known as _____________. - ANSWER
Tolerable Error
2. Auditor uses Performance Materiality for ____________. - ANSWER
Determining significant accounts, locations, and audit procedures.
3. Performance Materiality is what percent of Planning Materiality? -
ANSWER 75%
4. What is the risk of overreliance also known as? - ANSWER Risk of
incorrect acceptance of internal control reliability or risk of assessing control
risk too low
5. What is risk of under reliance also know as? - ANSWER The risk of
incorrect rejection of internal control reliability or risk of assessing control
risk too high
6. Existence/ Occurence relevant to Inventory - ANSWER Inventory balances
exist at the balance sheet date
7. Completeness relevant to Inventory - ANSWER Inventory balances include
all inventory transactions that have taken place during the period
,8. Right and Obligations relevant to Inventory - ANSWER The organization
has title to the inventory as of the balance sheet date.
9. Valuation or Allocation relevant to Inventory? - ANSWER The recorded
balances reflect the true underlying economic value of those assets.
10.Presentation and disclosure relevant to Inventory? - ANSWER Inventory is
properly classified on the balance sheet and disclosed in the notes to the
financial statements.
11.Which 2 assertions are the most relevant for Inventory? - ANSWER
Existence and valuation
12.What is the most relevant assertion for accounts payable? - ANSWER
Completeness
13.What happens when the ICFR management's report is incomplete? -
ANSWER Explanatory paragraph for this determination
14.What happens when the ICFR management's report has additional info? -
ANSWER Disclaim an opinion on that additional info
15.Which report will most likely be issued when an auditor decides to
emphasize large related-party transactions occurring in the financial
statements of a client? - ANSWER An unqualified opinion with an
explanatory paragraph
16.What would an audit firm be required to do if another CPA firm is used to
perform part of the engagement on a client's subsidiary? - ANSWER Verify
the independence of the other CPA firm of the client
,17.Which type of opinion should an auditor most likely issue when a client
company has a history of negative cash flow trends and continuing losses? -
ANSWER Unqualified with explanatory language
18.Which opinion may result from a justified departure from GAAP? -
ANSWER An unqualified audit opinion with an explanatory paragraph
19.What is the risk of incorrect acceptance of book value? - ANSWER Risk
that the auditor will conclude that the account balance does not contain a
material misstatement when the account balance actually does contain a
material misstatement.
20.What is the risk of incorrect rejection of book value? - ANSWER Risk that
the auditor will conclude that the account balance contains a material
misstatement when the account balance actually does not contain a material
misstatement.
21.What are the 4 questions an auditor needs to ask when Sampling? -
ANSWER 1. Which population, sampling units and characteristics
(Population)?
2. How many items (Sample Size)?
3. Which items should be included in the sample (Sample selection)?
4. What inferences can be made (Sample evaluation)?
22.What is a Sampling Unit? - ANSWER Individual units of a population
23.What is Statistical Sampling? - ANSWER Choosing part of a population of
interest for inspection.
, 24.Is statistical sampling Quantitative or Qualitative? - ANSWER Quantitative
25.What is Non statistical Sampling? - ANSWER The selection of sample
items based on the author's judgement
26.What are the 7 steps in Attribute Sampling? - ANSWER 1. Define the
attributes and what constitutes failure
2. Define the population from which the auditor takes the sample
3. Determine the sample size
4. Determine the method of selecting the sample
5. Select the sample items and perform the test of control
6. Evaluate the results and their effect on the substantive procedures and
internal controls
7. Document all phases of the sampling process
27.What percentages are Sampling risk often set at? - ANSWER 5%-10%
28.What is Stratification? - ANSWER Dividing a population into groups which
increases efficiency
29.Probability-Proportional-to-Size (PPS) Sampling - ANSWER A method of
sample selection where the probability of an item's selection for the sample
is proportional to its recorded amount
30.What is Basic Precision? - ANSWER The amount of error you are confident
of not exceeding if no errors are detected in the sample.
with 100% Verified Answers
Already Graded A+
1. Performance Materiality is also known as _____________. - ANSWER
Tolerable Error
2. Auditor uses Performance Materiality for ____________. - ANSWER
Determining significant accounts, locations, and audit procedures.
3. Performance Materiality is what percent of Planning Materiality? -
ANSWER 75%
4. What is the risk of overreliance also known as? - ANSWER Risk of
incorrect acceptance of internal control reliability or risk of assessing control
risk too low
5. What is risk of under reliance also know as? - ANSWER The risk of
incorrect rejection of internal control reliability or risk of assessing control
risk too high
6. Existence/ Occurence relevant to Inventory - ANSWER Inventory balances
exist at the balance sheet date
7. Completeness relevant to Inventory - ANSWER Inventory balances include
all inventory transactions that have taken place during the period
,8. Right and Obligations relevant to Inventory - ANSWER The organization
has title to the inventory as of the balance sheet date.
9. Valuation or Allocation relevant to Inventory? - ANSWER The recorded
balances reflect the true underlying economic value of those assets.
10.Presentation and disclosure relevant to Inventory? - ANSWER Inventory is
properly classified on the balance sheet and disclosed in the notes to the
financial statements.
11.Which 2 assertions are the most relevant for Inventory? - ANSWER
Existence and valuation
12.What is the most relevant assertion for accounts payable? - ANSWER
Completeness
13.What happens when the ICFR management's report is incomplete? -
ANSWER Explanatory paragraph for this determination
14.What happens when the ICFR management's report has additional info? -
ANSWER Disclaim an opinion on that additional info
15.Which report will most likely be issued when an auditor decides to
emphasize large related-party transactions occurring in the financial
statements of a client? - ANSWER An unqualified opinion with an
explanatory paragraph
16.What would an audit firm be required to do if another CPA firm is used to
perform part of the engagement on a client's subsidiary? - ANSWER Verify
the independence of the other CPA firm of the client
,17.Which type of opinion should an auditor most likely issue when a client
company has a history of negative cash flow trends and continuing losses? -
ANSWER Unqualified with explanatory language
18.Which opinion may result from a justified departure from GAAP? -
ANSWER An unqualified audit opinion with an explanatory paragraph
19.What is the risk of incorrect acceptance of book value? - ANSWER Risk
that the auditor will conclude that the account balance does not contain a
material misstatement when the account balance actually does contain a
material misstatement.
20.What is the risk of incorrect rejection of book value? - ANSWER Risk that
the auditor will conclude that the account balance contains a material
misstatement when the account balance actually does not contain a material
misstatement.
21.What are the 4 questions an auditor needs to ask when Sampling? -
ANSWER 1. Which population, sampling units and characteristics
(Population)?
2. How many items (Sample Size)?
3. Which items should be included in the sample (Sample selection)?
4. What inferences can be made (Sample evaluation)?
22.What is a Sampling Unit? - ANSWER Individual units of a population
23.What is Statistical Sampling? - ANSWER Choosing part of a population of
interest for inspection.
, 24.Is statistical sampling Quantitative or Qualitative? - ANSWER Quantitative
25.What is Non statistical Sampling? - ANSWER The selection of sample
items based on the author's judgement
26.What are the 7 steps in Attribute Sampling? - ANSWER 1. Define the
attributes and what constitutes failure
2. Define the population from which the auditor takes the sample
3. Determine the sample size
4. Determine the method of selecting the sample
5. Select the sample items and perform the test of control
6. Evaluate the results and their effect on the substantive procedures and
internal controls
7. Document all phases of the sampling process
27.What percentages are Sampling risk often set at? - ANSWER 5%-10%
28.What is Stratification? - ANSWER Dividing a population into groups which
increases efficiency
29.Probability-Proportional-to-Size (PPS) Sampling - ANSWER A method of
sample selection where the probability of an item's selection for the sample
is proportional to its recorded amount
30.What is Basic Precision? - ANSWER The amount of error you are confident
of not exceeding if no errors are detected in the sample.
