Acc 403 Week 6 Quiz

ACC 403 week 6 quiz

Question 1
2 out of 2 points

When dealing with audit risk:
Answer

Selected Answer: auditors accept some level of risk in performing the audit function.
Correct Answer: auditors accept some level of risk in performing the audit function.

Question 2
2 out of 2 points

________ misstatements are those where the auditor can determine the amount of the misstatement in the account.
Answer

Selected Answer: Known
Correct Answer: Known

Question 3
2 out of 2 points

When auditors allocate the preliminary judgment about materiality to account balances, the materiality allocated to any given account balance is referred to as:
Answer

Selected Answer: performance materiality.
Correct Answer:
performance materiality.

Question 4
2 out of 2 points

The measurement of the auditor's assessment of the likelihood that there are material misstatements due to error or fraud in a segment before considering the effectiveness of internal controls is defined as:
Answer

Selected Answer: inherent risk.
Correct Answer: inherent risk.

Question 5
2 out of 2 points

The risk that audit evidence for a segment will fail to detect misstatements exceeding performance materiality levels is:
Answer

Selected Answer: planned detection risk.
Correct Answer: planned detection risk.

Question 6
2 out of 2 points

When taken together, the concepts of risk and materiality in auditing:
Answer

Selected Answer: measure the uncertainty of amounts of a given magnitude.
Correct Answer: measure the uncertainty of amounts of a given magnitude.

Question 7
2 out of 2 points

Auditors generally allocate the preliminary judgment about materiality to the:
Answer

Selected Answer: balance sheet only.
Correct Answer: balance sheet only.

Question 8
2 out of 2 points

If an auditor believes the chance of financial failure is high and there is a corresponding increase in business risk for the auditor, acceptable audit risk would likely:
Answer

Selected Answer: be reduced.
Correct Answer: be reduced.

Question 9
2 out of 2 points

As the acceptable level of detection risk increases, an auditor may change the:
Answer

Selected Answer: timing of substantive tests by performing them at an interim date rather than year
end.
Correct Answer: timing of substantive tests by performing them at an interim date rather than year end.

Question 10
2 out of 2 points

If an auditor establishes a relatively high level for materiality, then the auditor will:
Answer

Selected Answer: accumulate less evidence than if a lower level had been set.
Correct Answer: accumulate less evidence than if a lower level had been set.

Question 11
2 out of 2 points

If it is probable that the judgment of a reasonable person will be changed or influenced by the omission or misstatement of information, then that information is, by definition of FASB Statement No. 2:
Answer

Selected Answer: material.
Correct Answer: material.

Question 12
2 out of 2 points

Inherent risk is often high for an account such as:
Answer

Selected Answer: inventory.
Correct Answer: inventory.

Question 13
2 out of 2 points

Inherent risk and control risk:
Answer

Selected Answer: are inversely related to detection risk.
Correct Answer: are inversely related to detection risk.

Question 14
2 out of 2 points

Why do auditors establish a preliminary judgment about materiality?
Answer

Selected Answer: To help plan the appropriate evidence to accumulate
Correct Answer: To help plan the appropriate evidence to accumulate

Question 15
2 out of 2 points

An auditor who audits a business cycle that has low inherent risk should:
Answer

Selected Answer: increase the performance materiality level for the area.
Correct Answer: increase the performance materiality level for the area.