WGU D251 ADVANCED AUDITING 2024 COMPREHENSIVE
450 PRACTICE QUESTIONS WITH DETAILED VERIFIED
ANSWERS GRADED A+(CORRECT 100%)!!!!
1. Ability of cash flow from operations to cover current debt and dividends - (correct answer)
Measures ability to cover current debt maturities and dividends with operating cash flow.
2. Accounting estimate - (correct answer) An approximation of a monetary amount when a
precise means of measurement is not available.
3. Accounting records - (correct answer) Client's records of the initial accounting entry and
supporting documents.
4. Acid-test (quick) ratio - (correct answer) Measures ability to meet short-term obligations
with liquid assets such as cash, short-term investments, and receivables.
5. Advance shipping notice (ASN) - (correct answer) An electronic acknowledgement of a
transaction by a supplier indicating goods shipped, prices, and other information such as freight
costs or taxes.
6. Adverse interest threat - (correct answer) The threat that a CPA will not act with objectivity
because the CPA's interests are opposed to the client's interests.
7. Adverse opinion - (correct answer) Auditors state the financial statements are not fairly
presented due to a pervasively material departure from the applicable financial reporting
framework.
8. Advocacy threat - (correct 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.
9. Allowance for sampling risk (ASR) - (correct answer) A measure of the uncertainty
associated with not sampling the entire population.
10. Analytical procedures - (correct 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.
11. Appropriate - (correct answer) Refers to the quality of audit evidence gathered.
12. Assertions - (correct answer) Statements or representations, explicit or implied, made by
management regarding the recognition, measurement, presentation, and disclosure of items
included in the financial statements.
13. Assurance services - (correct answer) Independent professional services that improve the
quality of information, or its context, for decision makers.
14. Attestation services - (correct 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.
,15. Attribute sampling - (correct answer) A sampling technique used to reach a conclusion
about a population in terms of a rate (frequency) of occurrence.
16. Audit committee - (correct 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.
17. Audit data analytics (ADA) - (correct 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.
18. Audit evidence - (correct answer) Information gathered by the auditor that is used when
forming an opinion on the fair presentation of a client's financial statements.
19. Audit program - (correct answer) A listing of details of the audit procedures to be used
when testing controls, conducting detailed substantive audit procedures, and completing the
audit.
20. Audit risk - (correct answer) The risk that an auditor expresses an inappropriate audit
opinion when the financial statements are materially misstated.
21. Audit sampling - (correct 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.
22. Audit services - (correct 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.
23. Audit strategy - (correct answer) The determination of the amount of time spent testing the
client's internal controls and conducting detailed testing of transactions and account balances.
24. Bank confirmation - (correct 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.
25. Basic precision (BP) - (correct answer) The amount of estimated misstatement in the
population, even if no misstatements are detected in the sample.
26. Benchmarking - (correct 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.
27. Bid rigging - (correct 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.
28. Bill-and-hold transactions - (correct 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.
29. Board of directors - (correct answer) A group that represents the shareholders and is
responsible for ensuring the company is being run to benefit the shareholders.
30. Bond trustee - (correct answer) A bond trustee is usually a commercial bank or a trust
company that is given fiduciary powers by a bond issuer to enforce the terms of a bond
indenture; the trustee sees that bond interest payments are made as scheduled and protects the
interests of the bondholders if the issuer defaults.
31. Breach of contract - (correct answer) A binding agreement is not honored by one or more
parties to a contract.
32. Cash earnings per share (CEPS) ratio - (correct answer) Shows cash flow capacity of a
company for each common share issued.
33. Classical variables sampling - (correct answer) A sampling method that uses normal
distribution theory to select a sample from a population and evaluate the characteristics of a
population based on the results of the sample.
34. Close relative - (correct answer) A covered member's parents, nondependent children,
brothers and sisters, or stepbrothers or stepsisters.
35. Closing procedures - (correct answer) Processes used by a client when finalizing the
accounts for an accounting period.
36. Cluster analysis - (correct answer) The process of discovering groups (termed clusters in
data science) of similar items in a set of data; items in the same group are similar, while items
in different groups are not as similar.
37. Common law - (correct answer) Law based on justice, reason, and common sense, rather
than on absolute rules.
38. Common-size analysis - (correct answer) A comparison of account balances to a single line
item.
39. Compilation engagement - (correct answer) An engagement in which a CPA applies
accounting and financial expertise to assist management in the presentation of financial
statements without undertaking to obtain or provide any assurance that there are no material
modifications that should be made to the financial statements for them to be in accordance with
the applicable financial reporting framework.
40. Compilation of inventory values - (correct answer) The client's documentation behind the
value for inventory in the general ledger; this shows the quantity of each item in inventory and
the values assigned to each item in inventory.
41. Compliance audit - (correct answer) An audit to determine whether the entity has conformed
with regulations, rules, or processes.
42. Component - (correct answer) An entity or business activity whose financial information is
required by an applicable financial reporting framework to be included in group financial
statements.
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