An Audit Strategy Is Developed _______

question 20

Multiple Choice

An audit strategy is developed _______.

• A)in response to the risk assessment for each significant account and assertion using the formula for audit risk
• B)in response to the risk assessment for each insignificant account and assertion using the formula for audit risk
• C)by the auditor, but must be reviewed and approved by management
• D)by the auditor, but must be reviewed and approved by the internal audit function

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Definitions:

Owner's Equity

The residual interest in the assets of the entity after deducting liabilities, representing what the owner has invested or kept in the business.

Proprietorship

A business structure owned by a single individual, where the owner and the business are legally treated as the same entity.

Accounting Principles

The standardized rules and guidelines that companies are required to follow when reporting financial data, ensuring consistency, reliability, and comparability of financial statements.

Owner's Equity

The residual interest in the assets of a company after deducting liabilities, representing the owners' share of the company’s assets.