Which of the Following Items Is Not One of the Seven

question 27

Multiple Choice

Which of the following items is not one of the seven key steps in performing risk assessment procedures?

• A) Develop preliminary audit strategies for significant assertions.
• B) Consider audit risk, including the risk of fraud.
• C) Test the entity's system of internal control.
• D) Make preliminary judgments about materiality.
• E) Obtain an understanding of the entity and its environment.

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Definitions:

Installment Note

A debt instrument requiring the borrower to make regular payments of principal and interest over a set period until the debt is paid in full.

Interest

The cost of borrowing money or the payment received for lending money, typically expressed as an annual percentage rate.

Principal Repayment

The process of paying back the original amount borrowed from a lender, excluding interests.

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its interest obligations from its operating income.