If No Material Differences Are Found Using Analytical Procedures, and the Auditor

question 34

Multiple Choice

If no material differences are found using analytical procedures, and the auditor concludes that misstatements are not likely to have occurred, then:

• A) the number or extent of tests of details of balances may be reduced.
• B) it will be necessary to increase the tests of transactions.
• C) it will be necessary to increase the tests of balances.
• D) it will not be necessary to perform tests of balances.

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Definitions:

Intercept

In the context of linear regression, the intercept is the expected value of the dependent variable when all independent variables are equal to zero.

Predicted Income

An estimate of future financial earnings based on factors such as education, occupation, and economic trends.

Multivariate Regression

A statistical technique used to understand the relationship between one dependent variable and two or more independent variables.