When CPAs Do Audits for Specified Elements, Accounts, or Items

question 107

Multiple Choice

When CPAs do audits for specified elements, accounts, or items,

• A) materiality is defined in terms of the overall financial statements.
• B) materiality is defined in terms of the elements, accounts, or items being audited.
• C) auditors do not need to extend their audit efforts to include other elements, accounts, or items that are interrelated with those being audited.
• D) the authority for auditing specified elements, accounts, or items is in the review and compilation standards.

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Definitions:

Unemployment

The situation in which individuals who are capable of working and are actively seeking work but are unable to find a job.

Expected

Something considered likely or anticipated to happen or become a reality in the future.

Potential GDP

The highest level of real GDP that can be sustained over the long term without increasing inflation, assuming full employment of resources.

Expansionary Policy

A macroeconomic policy that aims to stimulate the economy by increasing government spending, decreasing taxes, or lowering interest rates to boost economic activity.