An Appropriate Level of Effectiveness Risk for a Substantive Test

question 34

Multiple Choice

An appropriate level of effectiveness risk for a substantive test is:

• A)Inversely related to the assessed inherent risk and control risk and directly related to the analytical procedures risk.
• B)Inversely related to the assessed inherent risk,control risk,and analytical procedures risk.
• C)Directly related to the assessed inherent risk and control risk and indirectly related to the analytical procedures risk.
• D)Directly related to the assessed inherent risk,control risk,and analytical procedures risk.

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Definitions:

Stock Split

A corporate action that increases the number of shares outstanding, reducing the price per share without changing the company's market capitalization.

Paid in Surplus

The amount of money paid to a company by investors in exchange for stock, beyond the par value of the stock.

Par Value

The face value of a bond or stock, as determined at the time of issuance.

Reverse Stock Split

A reverse stock split is an action taken by a corporation to reduce the number of its current shares in the market, thereby increasing the share price.