Assessing Control Risk at a Lower Level Most Likely Would

question 56

Multiple Choice

Assessing control risk at a lower level most likely would involve

• A) Changing the timing of substantive procedures by omitting interim testing and performing the tests at year-end.
• B) Identifying specific internal controls relevant to specific assertions.
• C) Performing more extensive substantive procedures with larger sample sizes than originally planned.
• D) Reducing inherent risk for most of the assertions relevant to significant account balances.

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Definitions:

Gross Purchases

The total amount of all purchases made by a business before deducting any discounts, returns, or allowances.

Credit Terms

Credit terms are the payments conditions set by sellers for goods and services, including the period provided to the buyer to settle the owed amount.

Cash Conversion Cycle

A metric that shows the time span between a company's outlay of cash for raw materials and receiving payment from its customers, effectively measuring the time each net input dollar is tied up in the production and sales process.

Long-term Capital

Funds or assets held by a company for more than one year, used for financing long-term projects or investments.