Which of the Following Factors Would Lead an Auditor to Assess

question 36

Multiple Choice

Which of the following factors would lead an auditor to assess inherent risk at a higher level?

• A)The account balance is easily determined without estimation.
• B)The account balance is composed of a high volume of nonroutine transactions.
• C)The account balance is composed of simple transactions.
• D)All of the above would lead the auditor to assess a higher level of inherent risk.

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Definitions:

Materials Quantity Variance

The difference between the expected and actual quantity of materials used in production, impacting materials cost.

Standard Quantity

This represents the expected amount of materials or inputs needed to produce a unit of product under normal conditions.

Actual Output

Actual output is the factual quantity of goods or services produced within a specified time frame, representing productivity.

Standard Price

The predetermined cost assigned to materials, labor, or overhead for the purposes of budgeting and variance analysis.