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:

Least Squares Estimate

A method of estimating the coefficients in a linear regression model by minimizing the sum of the squares of the differences between observed and predicted values.

Slope

A measure of the steepness or incline of a line, often calculated as the ratio of the vertical change to the horizontal change between two points on the line.

Dependent Variable

A variable in statistical analysis that represents the outcome of interest, whose variation is hypothesized to depend on the manipulation or variation of other variables.

Independent Variable

A variable in a functional relation whose value determines the value or values of other variables.