As the Acceptable Level of Detection Risk Increases, an Auditor

question 1

Multiple Choice

As the acceptable level of detection risk increases, an auditor may change the:

• A)timing of substantive tests by performing them at an interim date rather than year end.
• B)timing of the tests on controls by performing them throughout the year rather than at one time.
• C)assess the level of inherent risk to a lower amount.
• D)increase the sample size to achieve a more effective test.

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Definitions:

Depreciation

Apportioning the cost of a tangible asset in a systematic way over its period of usefulness.

Adjusted Trial Balance

A list of all accounts and their balances after adjustments are made for accruals, deferrals, and errors, ensuring the total debits equal the total credits.

Accounting Period

The period of time covered by financial statements, usually consisting of 12 months, but can be of any length according to the business's reporting requirements.

Ledger

A book or collection of financial accounts where transactions are recorded.