Applying Substantive Tests to the Details of Asset and Liability

question 1

Multiple Choice

Applying substantive tests to the details of asset and liability accounts as of an interim date,rather than as of the balance sheet date:

• A)Eliminates the use of certain statistical sampling methods that would otherwise be available.
• B)Presumes that the auditor will reperform the tests as of the balance sheet date.
• C)Should be especially considered when there are rapidly changing economic conditions.
• D)Potentially increases the risk that errors which exist at the balance sheet date will not be detected.

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Definitions:

Cognitive Abilities

Mental capabilities that include reasoning, memory, attention, and language that contribute to the acquisition of knowledge and problem-solving.

Egocentric

A perspective or behavior characterized by a preoccupation with one's own experiences and a lack of consideration for the perspectives of others.

Theory of Mind

A cognitive skill that enables individuals to understand that others have their own beliefs, desires, and intentions that are different from one's own.

Cognitive Structures

Mental frameworks that help individuals organize and interpret information, fundamental to learning and understanding the world.