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WGU D215 Auditing exam with complete solutions 2024_2025.
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WGU D215 Auditing exam with complete solutions 2024_2025.
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WGU D215 Auditing exam with completesolutions 2024/2025
Ability of cash flow from operations to cover current debt and dividends -
ANSWER-Measures ability to cover current debt maturities and dividends with
operating cash flow.
Accounting estimate - ANSWER-An approximation of a monetary amount when a
precise means of measurement is not available.
Accounting records - ANSWER-Client's records of the initial accounting entry and
supporting documents.
Acid-test (quick) ratio - ANSWER-Measures ability to meet short-term obligations
with liquid assets such as cash, short-term investments, and receivables.
Advance shipping notice (ASN) - ANSWER-An electronic acknowledgement of a
transaction by a supplier indicating goods shipped, prices, and other information
such as freight costs or taxes.
Adverse interest threat - ANSWER-The threat that a CPA will not act with
objectivity because the CPA's interests are opposed to the client's interests.
Adverse opinion - ANSWER-Auditors state the financial statements are not fairly
presented due to a pervasively material departure from the applicable financial
reporting framework.
Advocacy threat - ANSWER-The threat that a CPA will promote a client's interests
or position to the point that his or her objectivity or independence is
compromised.
Allowance for sampling risk (ASR) - ANSWER-A measure of the uncertainty
associated with not sampling the entire population.
,Analytical procedures - ANSWER-Evaluations of financial information through
analysis of plausible relationships among both financial and nonfinancial data;
analytical procedures also encompass such investigation, as is necessary, of
identified fluctuations or relationships that are inconsistent with other relevant
information or that differ from expected values by a significant amount.
Appropriate - ANSWER-Refers to the quality of audit evidence gathered.
Assertions - ANSWER-Statements or representations, explicit or implied, made by
management regarding the recognition, measurement, presentation, and
disclosure of items included in the financial statements.
Assurance services - ANSWER-Independent professional services that improve
the quality of information, or its context, for decision makers.
Attestation services - ANSWER-Services performed when an independent
practitioner, or CPA, is engaged to issue a report on subject matter that is the
responsibility of another party.
Attribute sampling - ANSWER-A sampling technique used to reach a conclusion
about a population in terms of a rate (frequency) of occurrence.
Audit committee - ANSWER-A committee of the board of directors responsible for
oversight of internal controls, financial reporting and disclosure in the financial
statements, regulatory compliance, and the company's independent auditors.
Audit data analytics (ADA) - ANSWER-The science and art of discovering and
analyzing patterns, identifying anomalies, and extracting other useful information
in data underlying or related to the subject matter of an audit through analysis,
modeling, and visualization for planning and performing 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.
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 risk - ANSWER-The risk that an auditor expresses an inappropriate audit
opinion when the financial statements are materially misstated.
, Audit sampling - ANSWER-The selection and evaluation of less than 100% of the
population of audit relevance such that the auditor expects the items selected
(the sample) to be representative of the population and, thus, likely to provide a
reasonable basis for conclusions about the population.
Audit services - ANSWER-Services by an independent CPA that provide financial
statement users with (1) an opinion on whether the financial statements are
presented fairly, in all material respects, in accordance with an applicable
financial reporting framework and, in some cases, (2) an opinion on the
effectiveness of ICFR, which enhances the degree of confidence that intended
users can place in the financial statements.
Audit strategy - ANSWER-The determination of the amount of time spent testing
the client's internal controls and conducting detailed testing of transactions and
account balances.
Bank confirmation - ANSWER-Correspondence sent directly by the auditors to
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.
Basic precision (BP) - ANSWER-The amount of estimated misstatement in the
population, even if no misstatements are detected in the sample.
Benchmarking - ANSWER-An audit testing strategy that can be used to allow
evidence obtained in prior audit periods to support a conclusion about IT
application controls in the current audit period.
Bid rigging - ANSWER-An employee assists a vendor in winning a competitive bid
for a contract; employee is compensated, usually in the form of a cash payment.
Bill-and-hold transactions - ANSWER-A customer is billed for goods, but goods
are not shipped; accounting principles have very narrow criteria for when
revenue can be recognized for a bill-and-hold transaction; the transaction must
be initiated by the customer, and the customer must have a sound economic
reason for purchasing the goods and asking the seller to continue to hold the
goods.
Board of directors - ANSWER-A group that represents the shareholders and is
responsible for ensuring the company is being run to benefit the shareholders.
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