CPA - Audit Vocabulary Questions and
Correct Answers.
Account Balances - Answer One of three categories of financial statement assertions, relating
primarily to assets, liabilities, and equity interest
Accounting Estimate - 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 - Answer A request for independent verification of payables
Accounts Receivable Confirmation - Answer A request for independent verification of
receivables. Note that confirming accounts receivable is a required, generally accepts auditing
procedure
Accuracy - Answer A financial statement assertion in the "transaction and events" category
indicating that amounts and o the data relating to recorded transactions and events have been
recorded properly
Accuracy and Valuation - 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 - Answer A ratio that measures how effectively an enterprise is using its assets
Adverse Opinion - Answer An auditor's report stating that the financial statements "do not
present fairly ..."
Aging Schedule - Answer A listing of accounts receivable categorized by age (i.e. current, 30 to
60 days, 60 to 90 days, etc.)
Agreed-Upon Procedures - 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 - 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 - 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
Analytical Procedures - Answer Evaluations of financial information made by a study of
plausible relationships among both financial and non-financial data
Applicable Financial Reporting Framework - Answer The financial reporting framework that is
acceptable in the view of the nature of the entity and the objective of the financial statements,
or that is required by law or regulation
Application Controls - Answer Information processing controls that apply to the processing of
individual "applications" (eg controls surrounding receivables, controls surrounding payroll, etc.)
Appropriate (Appropriateness of Audit Evidence) - Answer The quality of being both reliable
(valid, factual, objective, and supportable) and relevant *related to the financial statement
assertion under consideration)
Articles of Incorporation - Answer A document filed with the state to create a corporation
Assertion - Answer A declaration about whether a subject matter is based on or in conformity
with selected criteria.
Association with Financial Statements - Answer A relationship that arises when an accountant
consents to the use of his or her name in connection with financial statements, or when an
accountant have prepared the financial statements
Assumption of Responsibility - Answer A situation in which the group engagement partner
decides to assume the responsibility for the work performed by a component auditor, and
therefore does not refer to the component auditor in the auditor's report
Attest Engagements - Answer An engagement in which a practitioner is engaged to issue or
does issue an examination, a review, or an agreed upon procedures report on subject matter, or
on an assertion about the subject matter, that is the responsibility of another party
Attestation Risk - Answer In an examination or review attest engagement, attestation risk is
the risk that the practitioner expresses an inappropriate opinion or conclusion, respectively,
when the subject matter or assertion is materially misstated
Attribute Sampling - Answer A statistical sampling method used to estimate the rate of
occurrence of a specific characteristic or attribute in a population
Correct Answers.
Account Balances - Answer One of three categories of financial statement assertions, relating
primarily to assets, liabilities, and equity interest
Accounting Estimate - 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 - Answer A request for independent verification of payables
Accounts Receivable Confirmation - Answer A request for independent verification of
receivables. Note that confirming accounts receivable is a required, generally accepts auditing
procedure
Accuracy - Answer A financial statement assertion in the "transaction and events" category
indicating that amounts and o the data relating to recorded transactions and events have been
recorded properly
Accuracy and Valuation - 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 - Answer A ratio that measures how effectively an enterprise is using its assets
Adverse Opinion - Answer An auditor's report stating that the financial statements "do not
present fairly ..."
Aging Schedule - Answer A listing of accounts receivable categorized by age (i.e. current, 30 to
60 days, 60 to 90 days, etc.)
Agreed-Upon Procedures - 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 - 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 - 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
Analytical Procedures - Answer Evaluations of financial information made by a study of
plausible relationships among both financial and non-financial data
Applicable Financial Reporting Framework - Answer The financial reporting framework that is
acceptable in the view of the nature of the entity and the objective of the financial statements,
or that is required by law or regulation
Application Controls - Answer Information processing controls that apply to the processing of
individual "applications" (eg controls surrounding receivables, controls surrounding payroll, etc.)
Appropriate (Appropriateness of Audit Evidence) - Answer The quality of being both reliable
(valid, factual, objective, and supportable) and relevant *related to the financial statement
assertion under consideration)
Articles of Incorporation - Answer A document filed with the state to create a corporation
Assertion - Answer A declaration about whether a subject matter is based on or in conformity
with selected criteria.
Association with Financial Statements - Answer A relationship that arises when an accountant
consents to the use of his or her name in connection with financial statements, or when an
accountant have prepared the financial statements
Assumption of Responsibility - Answer A situation in which the group engagement partner
decides to assume the responsibility for the work performed by a component auditor, and
therefore does not refer to the component auditor in the auditor's report
Attest Engagements - Answer An engagement in which a practitioner is engaged to issue or
does issue an examination, a review, or an agreed upon procedures report on subject matter, or
on an assertion about the subject matter, that is the responsibility of another party
Attestation Risk - Answer In an examination or review attest engagement, attestation risk is
the risk that the practitioner expresses an inappropriate opinion or conclusion, respectively,
when the subject matter or assertion is materially misstated
Attribute Sampling - Answer A statistical sampling method used to estimate the rate of
occurrence of a specific characteristic or attribute in a population
