PCAOB Auditing Standard No

question 27

Multiple Choice

PCAOB Auditing Standard No.2 and eight risk assessment standards of AICPA require the auditor to do all but:

• A)A more in-depth understanding of the entity and environment.
• B)A rigorous assessment of risk of material misstatement.
• C)Linkage between the risks of misstatement and the nature, timing, and extent of audit procedures.
• D)A more-in-depth sampling of evidence.

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Definitions:

After-Tax Discount Rate

A discount rate that has been adjusted for the effect of taxes, utilized in evaluating the net present value (NPV) of an investment after taxes.

Straight-Line Depreciation

A method of calculating the depreciation of an asset where its cost is evenly spread across its useful life.

Initial Investments

The initial amount of money spent to start a project, purchase assets, or establish a business.

After-Tax Discount Rate

The rate of return after taxes have been calculated, used in evaluating the profitability of investment opportunities.