As a Result of Tests of Controls, an Auditor Incorrectly

question 8

Multiple Choice

As a result of tests of controls, an auditor incorrectly assessed control risk too low and decreased substantive testing. This assessment occurred because the true deviation rate in the population was:

• A)more than the risk of assessing control risk too low based on the auditor's sample.
• B)more than the deviation rate in the auditor's sample.
• C)less than the risk of assessing control risk too low based on the auditor's sample.
• D)less than the deviation rate in the auditor's sample.

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Definitions:

Expired Costs

Costs that have been incurred and cannot be recovered, often through the consumption of goods or by providing services in a given period.

Adjusting Entry

Journal entries made in accounting records at the end of an accounting period to allocate income and expenses to the period in which they actually occurred.

Comprehensive Income

Total change in equity for a reporting period that includes all non-owner changes in equity, not just those resulting from net income.

Net Income Statement

A financial statement that shows a company's revenue and expenses over a specific period, leading to the net income or profit.