When There Is a Low Risk of Material Misstatement with an Assertion

question 128

Multiple Choice

When there is a low risk of material misstatement with an assertion and the client's system of internal controls is considered effective at reducing risk, ________.

• A)detection risk is set at low
• B)detection risk is set at high
• C)inherent risk is set to medium
• D)control risk is ignored

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Definitions:

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life, reflecting its consumption, wear and tear, or obsolescence.

Useful Life

The estimated time period that an asset is expected to be usable, contributing to the revenue-generating activities of a business.

Straight-Line Method

The straight-line method is a depreciation technique that allocates an even portion of an asset's cost to each year of the asset's useful life.

Accumulated Depreciation

The total sum of depreciation expense that has been recorded on a company's assets up to a specific date, reflecting the loss of asset value over time.