Which of the Following Factor(s)is Considered by the Auditor in Evaluating

question 46

Multiple Choice

Which of the following factor(s) is considered by the auditor in evaluating the potential for residual risk remaining in an account balance or class of transactions?

• A)Sources of potential misstatement.
• B)Extent of potential misstatement.
• C)Type of potential misstatement.
• D)All of the above should be considered.

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Definitions:

Ceteris Paribus

A Latin term meaning "all other things being equal," used in economics to isolate the effect of one variable by holding others constant.

Expected ROE

The anticipated return on equity, predicting future profitability by estimating the rate of return on shareholders' equity.

Multistage DDM

A version of the Dividend Discount Model which assumes dividends grow at different rates in different stages of a company's life.

Treasury Bond Yields

The return investors can expect to receive from holding a government treasury bond until its maturity.