Andy Szypula, the Audit Manager, Was Explaining to His New

question 4

Multiple Choice

Andy Szypula, the audit manager, was explaining to his new audit team how management assertions work when assessing the risk of material misstatements. He made two statements to his audit team: Auditors use assertions for account balances.
Auditors use assertions for presentations and disclosures.
Which of these statements were true?

• A) (i) only
• B) (ii) only
• C) both (i) and (ii)
• D) neither (i) nor (ii)

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Definitions:

Credit Cost Curve

A graphical representation of the trade-off between the credit costs against the recovery rate or the likelihood of default.

Credit Period

The time frame between the purchase of goods on credit and the payment for those goods, offered by suppliers to buyers as an incentive.

Credit Period

The Credit Period is the time frame during which a buyer can pay for goods or services purchased on credit without incurring interest charges.

Credit Cost Curve

A graphical representation of the relationship between the cost of credit (interest rates) and the quantity of credit available in the market.