The Risk Model Is Defined as AR = IR X

question 14

Multiple Choice

The risk model is defined as AR = IR x CR x DR.The risk of assessing control risk too low can lead to:

• A)The auditor performing more work than needed, thus wasting resources.
• B)The auditor failing to do additional work that should be done.
• C)Poor choice of procedures.
• D)Expanding sample sizes required for statistical sampling of account balances.

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Definitions:

Intangibles

Assets owned by a company that don't have physical substance but have value, such as patents, trademarks, and copyrights.

Intangible Assets

Refers to non-physical assets that have value, such as patents, trademarks, goodwill, and copyrights.

Finite Life

Refers to assets or investments that have a defined time period over which they are expected to generate returns or be useful.

Amortize

The process of paying off a debt over time through regular payments, which can include portions of both principal and interest.