When Assessing the Risk of Material Misstatements in the Financial

question 29

Multiple Choice

When assessing the risk of material misstatements in the financial statements,

• A)inadequate internal control procedures will mitigate client business risk.
• B)GAAS specifies in detail how much and what types of evidence the auditor needs to obtain.
• C)company management is responsible for determining materiality levels.
• D)the auditor must have an understanding of the client's business and industry.

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Definitions:

FIFO Method

"First In, First Out," an accounting method for valuing inventory where the first items placed in inventory are considered sold first.

Ending Inventory

The total value of all unsold goods held by a company at the end of an accounting period.

Month End Inventory

Describes the total value of all inventory held by a business at the end of a month, used for accounting and reporting purposes.

Pairs Of Skis

Two skiing boards used for the sport of skiing, sold or used together as a set.