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Auditors spend significant time gaining an understanding of their client and the industry in which it operates. It is important to know

key terminology related to financial accounting, business organization, and auditing concepts.

For each numbered description below, select the concept that best applies. The concepts may be used once, more than once, or not at

all.

a$.$ A group that represents shareholders$/$owners and is responsible for ensuring

the entity is being run to benefit the shareholders$/$owners$.$

b$.$ Processes used by a client at the end of a period to finalize the accounts.

c$.$ An entity that is not independent of the client.

d$.$ A comparison of account balances to a single line item.

e$.$ The ability of a company to pay its current debts when they fall due.

f$.$ A situation in which noncompliance with laws and regulations impacts

amounts already included in the financial statements.

g$.$ Client risk that affects only cash disbursements.

h$.$ The analysis of financial information by considering the plausible relationship

among sales revenue and allotted shelf space in a grocery store.

i$.$ A committee of the board of directors responsible for hiring the external

auditors.

j$.$ A comparison of a client's inventory turnover in days with the industry

average.