If the Upper Limit on Misstatements Exceeds Tolerable Misstatement, the Auditor

question 42

Multiple Choice

If the upper limit on misstatements exceeds tolerable misstatement, the auditor is least likely to

• A) Increase sample size.
• B) Conduct other substantive procedures.
• C) Adjust the account balance.
• D) Increase the risk of incorrect rejection.

Understand the implications of adjusting entries on trial balances and financial statements preparation.

Understand the concepts of debits and credits in the double-entry accounting system.

Identify the normal balances of different types of accounts (assets, liabilities, equity).

Recognize the structure and purpose of T accounts and journal entries.

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Definitions:

Unlearned Tendencies

Innate behaviors or predispositions not acquired by learning or experience.

Facial Expressions

Visible changes in the face that convey an individual's emotions to others, including happiness, sadness, anger, and fear.

Deaf and Blind

Refers to the condition in which an individual is unable to hear and see to a significant extent.

Duchenne Smile

A genuine smile that involves contraction of both the zygomatic major muscle (raising the corners of the mouth) and the orbicularis oculi muscle (raising the cheeks and forming crow's feet around the eyes).