Assessing Control Risk as Less Than High Would Most Likely

question 65

Multiple Choice

Assessing control risk as less than high would most likely involve:

• A) changing the timing of substantive tests by omitting interim testing and performing the tests at year-end.
• B) identifying specific internal controls relevant to specific assertions.
• C) performing more extensive substantive tests with larger sample sizes than originally planned.
• D) reducing inherent risk for most of the assertions relevant to significant account balances.

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Definitions:

Variable Utilities Cost

Expenses for utilities that change in proportion to the level of production or activity of a business.

High-low Method

The high-low method is a straightforward way to estimate the variable and fixed components of a cost by using the highest and lowest activity levels and the corresponding total costs.

Machine Hour

A unit of measurement that represents an hour of operation of a machine or equipment.

Fixed Costs

Expenses that do not change in proportion to the level of production or sales, such as rent and salaries.