What Impact Will There Be on Sample Size for Substantive

question 15

Multiple Choice

What impact will there be on sample size for substantive testing when there is an increase in the tolerable misstatement?

• A) decrease
• B) negligible
• C) increase
• D) none of the above

---

Definitions:

Financial Statements

Compiled reports that provide an overview of a business’s financial condition, including income statement, balance sheet, and cash flow statement.

Return on Total Assets

A profitability ratio that measures the net income produced by total assets during a period by comparing net income to the average total assets.

Performance

Refers to the act of carrying out or accomplishing an action, task, or function.

Profit Margin

A financial metric that calculates the percentage of profit derived from revenue after all expenses are subtracted.