Which of the Following Statements Is Correct

question 8

Multiple Choice

Which of the following statements is correct?

• A) If detection risk is high, significant substantive procedures are necessary to reduce detection risk.
• B) There is an inverse relation between the auditor's assessed risk of material misstatement and detection risk.
• C) There is no relation between the auditor's assessed risk of material misstatement and detection risk.
• D) If detection risk is low, only a small number of substantive procedures are necessary to reduce the detection risk.

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Definitions:

Quarterly Estimated Payments

Payments made to the IRS by self-employed individuals or entities that anticipate owing tax of $1,000 or more, paid in four equal installments throughout the year.

Estimated Payment

refers to tax payments made in advance throughout the year, based on an estimate of the taxpayer's annual income.

Corporate AMT Exemption

An exemption that prevents corporations from having to pay the Alternative Minimum Tax up to a certain threshold of income.

AMT

Alternative Minimum Tax, a separate tax system in the United States designed to ensure that certain taxpayers pay at least a minimum amount of tax.