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DataAnalyticsforAccounting,1e(Richardson)
Chapter6AuditDataAnalytics
1)AsalesorderIDisauniqueidentifierforeachpurchaseorder.
Answer:FALSE
Difficulty:2Medium
Topic:WhentoUseAuditDataAnalytics
LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
2)Abusinessunitcodeisusedtoidentifythebusinessunit,region,andbranchatthelevelthatfinancialstatementsarebeingreconciled.
Answer:FALSE
Difficulty:2Medium
Topic:WhentoUseAuditDataAnalytics
LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology
3)AcustomeraccountIDidentifiesthecustomerfromwhompaymentisexpectedortowhomunusedcreditshavebeenapplied.
Answer:TRUE
Difficulty:2Medium
Topic:WhentoUseAuditDataAnalytics
LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology
4)Descriptiveanalyticssummarizesactivityormastersdataelementsbasedoncertainattributes.
Answer:TRUE
Difficulty:1Easy
Topic:WhentoUseAuditDataAnalytics
LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology
5)Theauditormayselectasampleoftheaccountstoverifythattheywereclosedandthedocumentationexists.
Answer:FALSE
Difficulty:3Hard
Topic:WhentoUseAuditDataAnalytics
LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
6)Onceanauditorhasabasicunderstandingofthedata,theycanthenperformdiagnosticanalyticswhichlookfordifferencesorpatternsofinterestinthedata.
Answer:FALSE
Difficulty:3Hard
Topic:WhentoUseAuditDataAnalytics
LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
7)Anauditorwillperformpredictiveanalyticsbeforediagnosticanalytics.
Answer:FALSE
Difficulty:1Easy
Topic:WhentoUseAuditDataAnalytics
LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
8)Prescriptiveanalyticsidentifiesacourseofactionfortheauditortotakebasedontheactionstakeninsimilarsituationsinthepast.
Answer:TRUE
Difficulty:1Easy
Topic:WhentoUseAuditDataAnalytics
LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
9)Samplingisusefulwhenyouhavemanualauditprocedures,suchastestingtransactiondetailsorevaluatingsourcedocuments.
Answer:TRUE
Difficulty:1Easy
Topic:DescriptiveAnalytics
LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
10)Monetaryunitsamplingallowsauditorstomitigaterisk.
Answer:FALSE
Difficulty:1Easy
Topic:DescriptiveAnalytics
LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
11)Benford'sLawpredictsthedistributionoffirstdigits.
Answer:TRUE
Difficulty:1Easy
Topic:DiagnosticAnalyticsandBenford'sLaw
LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
12)Exactmatchingisawayinwhichauditorsjoindatabasetableswithaforeignkeyfromonetabletothesecondarykeyofanother.
Answer:FALSE
Difficulty:3Hard
Topic:DiagnosticAnalyticsandBenford'sLaw
LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
13)Sequencechecksareusefulforfindinggaps,suchasamissingcheckinthecashdisbursementsjournal,orduplicatetransactions,suchasduplicatepaymentstovendors.
Answer:TRUE
Difficulty:1Easy
Topic:DiagnosticAnalyticsandBenford'sLaw
LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
14)Regressionallowsanauditortopredictaspecificdependentvaluebasedonindependentvariableinputs.
Answer:TRUE
Difficulty:2Medium
Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics
LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
15)Classificationinauditingistypicallyfocusedonriskassessment.
Answer:TRUE
Difficulty:1Easy
Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics
LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
16)AuditDataStandards(ADS)weredevelopedbytheSEC.
Answer:FALSE
Difficulty:1Easy
Topic:WhentoUseAuditDataAnalytics
LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
17)Sortingindescendingordershowsthesmallestnumbervaluesfirst.Sortinginascendingordershowsthelargestvaluesfirst.
Answer:FALSE
Difficulty:1Easy
Topic:DescriptiveAnalytics
LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
18)Summarystatisticsprovideinsightintotherelativesizeofanumbercomparedwiththepopulation.
Answer:TRUE
Difficulty:1Easy
Topic:DescriptiveAnalytics
LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
19)Afuzzymatchisbasedonthesimilarityofthevalues.
Answer:TRUE
Difficulty:2Medium
Topic:DiagnosticAnalyticsandBenford'sLaw
LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
20)Artificialintelligenceisdesignedaroundtheideathatcomputerscanlearnaboutactionorbehaviorfromthepastandpredictthecourseofactionforthepresent.
Answer:FALSE
Difficulty:3Hard
Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics
LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics
Bloom's:Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;BBIndustry
21)Whichofthefollowingstatementsistrue?
A)Monetaryunitsamplingismorelikelytopullaccountswithsmallbalances.
B)Monetaryunitsamplingallowsauditorstoevaluateaccountbalances.
C)Prescriptiveanalyticsattemptstofindhiddenpatternsorvariables.
D)Predictiveanalyticsusesmachinelearningandartificialintelligence.
Answer:B
Difficulty:2Medium
Topic:DiagnosticAnalyticsandBenford'sLaw
LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw
Bloom's:Understand;Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
22)Whichofthefollowingstatementsisfalse?
A)Predictiveanalyticsattemptstofindhiddenpatternsorvariables.
B)Regressionallowsanauditortopredictaspecificdependentvaluebasedonindependentvariableinputs.
C)Classificationinauditingismainlyfocusedonriskassessment.
D)Monetaryunitsamplingismorelikelytopullaccountswithsmallbalances.
Answer:D
Difficulty:2Medium
Topic:DiagnosticAnalyticsandBenford'sLaw
LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw
Bloom's:Understand;Remember
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
23)WhenworkingwithCAATs,whichofthefollowingstatementsisfalse?
A)Innerjoinwillshowonlytherecordsfrombothtablesthatmatchandexcludeeverythingthatdoesn'tmatch.
B)Leftjoinwillshowallrecordsfromthefirsttableandonlyrecordsfromthesecondtablethatmatch.
C)Rightjoinwillshowallrecordsfromthesecondtableandrecordsfromthefirsttablethatmatch.
D)Outerjoinwillshowallrecords,includingonlymatchingones.
Answer:D
Difficulty:2Medium
Topic:DiagnosticAnalyticsandBenford'sLaw
LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
24)Whichofthefollowingisthebestchoicefortheuniqueidentifierforeachsalesorder?
A)Item#
B)Shipping#
C)Purchase_Order#
D)Sales_Order#
Answer:D
Difficulty:2Medium
Topic:WhentoUseAuditDataAnalytics
LearningObjective:06-01UnderstandDifferentTypesofAnalysisforAuditingandWhentoUseThem
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
25)Whichofthefollowingisanexampleofdescriptiveanalytics?
A)Summarystatistics
B)Z-score
C)Similaritymatching
D)Fuzzymatching
Answer:A
Difficulty:2Medium
Topic:DescriptiveAnalytics
LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
26)Whichofthefollowingisnotanexampleofdescriptiveanalytics?
A)Drill-down
B)Ageanalysis
C)Sampling
D)Sorting
Answer:A
Difficulty:2Medium
Topic:DescriptiveAnalytics
LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
27)Whichofthefollowingisanexampleofpredictiveanalytics?
A)Classification
B)Z-score
C)Decisionsupportsystems
D)Diagnostic
Answer:A
Difficulty:2Medium
Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics
LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
28)Whichofthefollowingisnotanexampleofpredictiveanalytics?
A)Classification
B)Regression
C)Probability
D)Artificialintelligence
Answer:D
Difficulty:1Easy
Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics
LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
29)Whichtypeofauditanalyticsmightbeusedtosummarizeactivityormasterdatabasedoncertainattributes?
A)Prescriptiveanalytics
B)Predictiveanalytics
C)Diagnosticanalytics
D)Descriptiveanalytics
Answer:D
Difficulty:2Medium
Topic:DescriptiveAnalytics
LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
30)Whichtypeofauditanalyticsmightbeusedtodetectcorrelationsandpatternsofinterest?
A)Prescriptiveanalytics
B)Predictiveanalytics
C)Diagnosticanalytics
D)Descriptiveanalytics
Answer:C
Difficulty:2Medium
Topic:DiagnosticAnalyticsandBenford'sLaw
LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
31)Whichtypeofauditanalyticsmightbeusedtoidentifycommonattributesorpatternsthatmaybeusedtoidentifysimilaractivity?
A)Prescriptiveanalytics
B)Predictiveanalytics
C)Diagnosticanalytics
D)Descriptiveanalytics
Answer:B
Difficulty:2Medium
Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics
LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
32)Whichtypeofauditanalyticsmightbeusedtorecommendactionbasedonpreviouslyobservedactions?
A)Prescriptiveanalytics
B)Predictiveanalytics
C)Diagnosticanalytics
D)Descriptiveanalytics
Answer:A
Difficulty:2Medium
Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics
LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
33)Groupingbalancesbydateisreferredtoas________andisanexampleof________analytics.
A)ageanalysis;diagnostic
B)ageanalysis;descriptive
C)sorting;diagnostic
D)sorting;descriptive
Answer:B
Difficulty:2Medium
Topic:DescriptiveAnalytics
LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
34)Identifyingthelargestorsmallestvaluesisreferredtoas________andisanexampleof________analytics.
A)sorting;diagnostic
B)sorting;descriptive
C)summarystatistics;diagnostic
D)summarystatistics;descriptive
Answer:B
Difficulty:2Medium
Topic:DescriptiveAnalytics
LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
35)________allowsauditorstoevaluateaccountbalancesandisanexampleof________analytics.
A)Monetaryunitsampling;diagnostic
B)Monetaryunitsampling;descriptive
C)Randomsampling;diagnostic
D)Randomsampling;descriptive
Answer:B
Difficulty:2Medium
Topic:DescriptiveAnalytics
LearningObjective:06-02UnderstandBasicDescriptiveAuditAnalyses
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
36)________assignsavaluetoanumberbasedonhowmanystandarddeviationsitstandsfromthemeanandisanexampleof________analytics.
A)AZ-score;diagnostic
B)AZ-score;descriptive
C)Benford'sLaw;diagnostic
D)Benford'sLaw;descriptive
Answer:A
Difficulty:2Medium
Topic:DiagnosticAnalyticsandBenford'sLaw
LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
37)Exploringthedetailsbehindthevaluesisreferredtoas________andisanexampleof________analytics.
A)sorting;diagnostic
B)sorting;descriptive
C)drill-down;diagnostic
D)drill-down;descriptive
Answer:C
Difficulty:2Medium
Topic:DiagnosticAnalyticsandBenford'sLaw
LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
38)________identifiestransactionsoruserswithatypicalactivitybasedonthedistributionoffirstdigitsandisanexampleof________analytics.
A)Monetaryunitsampling;diagnostic
B)Monetaryunitsampling;descriptive
C)Benford'sLaw;diagnostic
D)Benford'sLaw;descriptive
Answer:C
Difficulty:2Medium
Topic:DiagnosticAnalyticsandBenford'sLaw
LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
39)Detectinggapsinrecordsandduplicateentriesisreferredtoas________andisanexampleof________analytics.
A)sequencecheck;diagnostic
B)sequencecheck;descriptive
C)fuzzymatching;diagnostic
D)fuzzymatching;descriptive
Answer:A
Difficulty:2Medium
Topic:DiagnosticAnalyticsandBenford'sLaw
LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
40)Groupingrecordsbynon-obvioussimilaritiesisreferredtoas________andisanexampleof________analytics.
A)clustering;diagnostic
B)clustering;predictive
C)classification;diagnostic
D)classification;predictive
Answer:A
Difficulty:2Medium
Topic:DiagnosticAnalyticsandBenford'sLaw
LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
41)Predictingspecificdependentvaluesbasedonindependentvariableinputsisreferredtoas________andisanexampleof________analytics.
A)regression;prescriptive
B)regression;predictive
C)classification;prescriptive
D)classification;predictive
Answer:B
Difficulty:2Medium
Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics
LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
42)Usingarankscoretoevaluatethestrengthofclassificationisreferredtoas________andisanexampleof________analytics.
A)regression;prescriptive
B)regression;predictive
C)probability;prescriptive
D)probability;predictive
Answer:D
Difficulty:2Medium
Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics
LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
43)Evaluatingthetoneoftexttoforecastanoutcomeisreferredtoas________andisanexampleof________analytics.
A)classification;prescriptive
B)classification;predictive
C)sentimentanalysis;prescriptive
D)sentimentanalysis;predictive
Answer:D
Difficulty:3Hard
Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics
LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics
Bloom's:Apply
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
44)Usingobservationsofpastactionstopredictfutureactionsforsimilareventsisreferredtoas________andisanexampleof________analytics.
A)artificialintelligence;prescriptive
B)artificialintelligence;predictive
C)appliedstatistics;prescriptive
D)appliedstatistics;predictive
Answer:A
Difficulty:2Medium
Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics
LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
45)Whichofthefollowingz-scoresislikelyanoutlierthatwarrantsfurtherscrutiny?
A)?2.1
B)0.0
C)1.75
D)3.2
Answer:D
Difficulty:2Medium
Topic:DiagnosticAnalyticsandBenford'sLaw
LearningObjective:06-03UnderstandMoreComplexStatisticalAnalysesIncludingBenford'sLaw
Bloom's:Understand
AACSB:ReflectiveThinking
AICPA:BBLeveragingTechnology;FNLeveragingTechnology;FNDecisionMaking
46)Whichtestingapproachisusefulindeterminingprocedurestofollowwhennewcreditaccountsareopened?
A)Appliedstatistics
B)Regression
C)Fuzzymatching
D)Classification
Answer:A
Difficulty:2Medium
Topic:CreatingAdvancedPredictiveandPrescriptiveAnalytics
LearningObjective:06-04UnderstandAdvancedPredictiveandPrescriptiveAnalytics
Bloom
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