Which of the Following Statements Is False

question 74

Multiple Choice

Which of the following statements is false?

• A)Inherent risk is inversely related to the amount of audit evidence,whereas detection risk is directly related to the amount of audit evidence required.
• B)Inherent risk is directly related to evidence,whereas detection risk is inversely related to the amount of audit evidence required.
• C)Inherent risk is the susceptibility of the financial statements to material misstatement,assuming no internal controls.
• D)Inherent risk and control risk are assessed by the auditor and controlled by the client.

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Definitions:

Agent of Necessity

A person who is appointed to act on behalf of another in situations of urgent necessity, without prior authorization from the principal.

Extravagance

The act or habit of spending more money than is necessary or wise; often associated with lavish or luxurious expenditure.

Credit Card

A plastic card issued by banks or financial institutions allowing the holder to borrow funds at the point of sale, which they then pay back at a later date.

Non-necessary Purchases

Expenditures on items or services that are not essential for basic living or business operations.