The Ultimate Purpose of Assessing Control Risk Is to Contribute

question 27

Multiple Choice

The ultimate purpose of assessing control risk is to contribute to the auditor's evaluation of the ________.

• A)factors that raise doubts about the auditability of the financial statements
• B)operating effectiveness of internal control policies and procedures
• C)risk that material misstatements exist in the financial statements
• D)possibility that the nature and extent of substantive tests may be reduced

---

Definitions:

Shareholders

Individuals or entities that own shares in a corporation, giving them certain rights and a stake in the company's performance.

Journal Entry

A record in accounting that shows the financial transactions of a company in terms of debits and credits.

Cost Method

An accounting approach where investments are recorded at their acquisition cost, with income recognized only when dividends are received from the investee.

Dividends

Money disbursed to shareholders by a corporation, often coming from the profits of the business.