What Is the Primary Objective of Testing All Individually Significant

question 24

Multiple Choice

What is the primary objective of testing all individually significant items rather than sample testing?

• A)To increase the audit risk at which a decision will be reached from the results of the sample selected.
• B)To increase sample size.
• C)To accept no sampling risk for items greater than tolerable misstatement.
• D)To increase the size of the confidence bound around the projected misstatement.

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Definitions:

Contingent Payment

A payment that depends on achieving certain conditions or outcomes in the future.

Market Value

The current quoted price at which an asset or a company can be bought or sold on the open market.

Probability-Weighted

A method that takes into account the likelihood of various outcomes, often used in financial forecasting and risk assessment to estimate future cash flows or earnings.

Time Value

The concept in finance that money available at the present time is worth more than the same amount in the future due to its potential earning capacity.