When Assessing Risks Affecting Cash

question 135

Multiple Choice

When assessing risks affecting cash,

• A) if a business defers preparing bank reconciliations for long periods, the value of the control is reduced and may affect the auditor's assessment of control risk for cash.
• B) most companies are likely to have significant client business risks affecting their cash balances.
• C) there is a low inherent risk for the existence and completeness objectives for cash.
• D) all of the above are accurate statements.

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Definitions:

Increasing Opportunity Cost

A principle that states as more resources are dedicated to an activity, the cost of producing an additional unit increases.

Bowed Inward

Describes a concave shape of an economic curve, such as the production possibility frontier, indicating increasing opportunity costs.

Bowed Out

A term used to describe a situation where a party withdraws from an agreement, competition, or situation.

Adaptable

The ability to adjust or modify oneself or processes to suit different conditions or environments.