Indicate Whether Each of the Following Characteristics Relate to the Risk

question 104

Short Answer

Indicate whether each of the following characteristics relate to the risk of overreliance (O),risk of underreliance (U),both (B),or neither (N).
1____.Is specifically considered by the auditor in determining sample size and evaluating sample results.
2____.Is characterized by the auditor's sample indicating that the control is functioning effectively.
3____.Results in the auditor drawing an incorrect conclusion with respect to the population being examined.
4____.Is also referred to as the risk of assessing control risk too high.
5____.Results in an effectiveness loss to the auditor.
6____.Is used to determine the appropriate sample selection method.
7____.Is characterized by the population deviation rate being less than the tolerable rate of deviation.
8____.Is an example of a sampling risk to which the auditor is exposed when performing tests of controls.

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Definitions:

Units

Standard quantities used to specify measurements and quantify the magnitude of physical quantities.

Perfect Competition

A market structure characterized by a large number of small firms, homogenous products, perfect information, and no barriers to entry or exit, leading to price-taking behavior.

Demand Curves

Graphical representations showing the relationship between the price of a good or service and the quantity of that good or service that consumers are willing and able to purchase at different prices.

Marginal Revenue Curves

Graphical representations that show how marginal revenue varies as output level changes, used by firms to determine the most profitable level of production.