The Auditor Designs the Risk Assessment Procedures That He Believes

question 105

Multiple Choice

The auditor designs the risk assessment procedures that he believes will be effective in assessing the risk of material misstatement for the entity.According to the auditing standards,the risk assessment process should include

• A)inquiries of management about the risk of material misstatement due to errors or fraud
• B)tests of controls
• C)observation of inventory
• D)substantive test of transactions

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Definitions:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, demonstrating the goods' sensitivity to price changes.

Quantity

The amount or number of a material or immaterial good considered as a unit or total.

Perfectly Inelastic

Describing demand that is entirely unresponsive to price changes, represented by a vertical demand curve.

Oysters

Marine mollusks known for their hard shells and edible flesh, often considered a delicacy.