An Increase in the Risk of Material Misstatement Would Lead

question 54

Multiple Choice

An increase in the risk of material misstatement would lead to which of the following responses?

• A) Increase in the extent of auditing procedures.
• B) Decrease in the extent of auditing procedures.
• C) No change in the extent of auditing procedures.
• D) No change in the extent of audit procedures.

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Definitions:

Fixed Assets

Assets of a long-term nature used in the operation of a business, such as land, buildings, machinery, and equipment, which are not expected to be converted to cash within a year.

Financial Position

A snapshot of the resources, obligations, and net worth of an entity at a specific point in time, showing its financial health and stability.

Comprehensive Income

The total change in equity for a business that comes from non-owner sources during a specific period, including all unrealized gains and losses.

Statement of Financial Position

A financial document showing a company's assets, liabilities, and equity at a specific point in time, also known as a balance sheet.