As the Acceptable Level of Detection Risk Decreases, an Auditor

question 64

Multiple Choice

As the acceptable level of detection risk decreases, an auditor may change the:

• A)timing of substantive tests by performing them at an interim date rather than at balance date.
• B)assessed level of inherent risk to a higher amount.
• C)timing of tests of controls by performing them at several dates rather than at one time.
• D)nature of substantive tests from a less effective to a more effective procedure.

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Definitions:

Total Expenses

The sum of all costs and expenses incurred by a business during a specific period, including operational, administrative, and selling expenses.

Adjusting Entries

Entries made in the books of account to correct or allocate income and expenses to the appropriate accounting period.

Balance Sheet

A balance sheet is a financial statement that provides a snapshot of a company's financial condition at a specific point in time, detailing assets, liabilities, and shareholders' equity.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, detailing revenue, expenses, and net income.