The Auditors of Smith Electronics Wish to Limit the Audit

question 33

Multiple Choice

The auditors of Smith Electronics wish to limit the audit risk of material misstatement in the test of accounts receivable to 5 percent.They believe that inherent risk is 100%,and there is a 40% risk that material misstatement could have bypassed the client's system of internal control.What is the maximum detection risk the auditors should specify in their substantive procedures of details of accounts receivable?

• A)5%.
• B)12.5%.
• C)42.7%.
• D)60%.

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Definitions:

Cytoplasm

The material within a living cell, excluding the nucleus, made up of cytosol and organelles, where most cellular activities occur.

Nucleolus

A small, dense structure found within the nucleus of cells, primarily involved in the production of ribosomes.

Separation Of Chromosomes

A process during cell division where replicated chromosomes are separated into two new nuclei.

Mitosis

A type of cell division that results in two daughter cells each having the same number and kind of chromosomes as the parent nucleus, typical of ordinary tissue growth.