Which of the Following Is a Correct Statement

question 107

Multiple Choice

Which of the following is a correct statement?

• A)When internal controls are effective, control risk can be reduced, and therefore the auditor will decrease the ARIA.
• B)There is a direct relationship between ARIA and the required sample size.
• C)A lower control risk risk requires a lower ARO in testing the controls.
• D)ARO measures the auditor's desired assurance for an account balance.

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Definitions:

Property Taxes

Levies imposed by governmental entities based on the value of real estate or other property, used to fund public services.

Marginal Tax Rate

The rate at which an additional dollar of income is taxed, representing the percentage of tax applied to the last dollar earned.

Tax-Free

Tax-free describes goods, transactions, or income that are not subject to taxation by the government.

Taxed

Subjected to a financial charge or levy by a government on income, goods, or activities.