If the _______ is less than the _______, the audit team would conclude that the account balance is fairly stated.a. Projected misstatement; tolerable misstatement.b. Tolerable misstatement; projected misstatement.c. Upper limit on misstatements; tolerable misstatement.d. Tolerable misstatement; upper limit on misstatements.

If the _ is less than the _, the audit team would conclude that the account balance is fairly stated.a. Projected misstatement; tolerable misstatement.b. Tolerable misstatement; projected misstatement.c. Upper limit on misstatements; tolerable misstatement.d. Tolerable misstatement; upper limit on misstatements.

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter8: Specialized Audit Tools: Attributes Sampling, Monetary Unit Sampling, And Data Analytics Tools

Section: Chapter Questions

Problem 18RQSC

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Similar questions

Some account balances such as those for pensions and leases are the result of complex calculations. The susceptibility to material misstatements in these types of accounts is defined as a. Sampling risk b. Detection risk c. Inherent risk. d. audit risk
What is tolerable misstatement? How do auditors use it when deciding whether account balancesare fairly recorded?
Which of the following is the maximum misstatement that can exist in an account before it is considered materially misstated? Select answer from the options below Anticipated misstatement Projected misstatement Upper misstatement limit Tolerable misstatement
Which of the following is not a characteristic of non-counterbalancing error? Group of answer choices a.If the net income of one year is understated due to non-counterbalancing error, the net income of subsequent year is also affected. b.The statement of financial position of the year of non-counterbalancing error and succeeding statement of financial position are incorrect until the error is corrected. c.If not detected, this is not automatically corrected in the next accounting period. d.The income statement of the period in which the non-counterbalancing error is committed is misstated.
Explain why the analysis of differences is important in the confirmation of accounts receivable, even if the misstatements in the sample are not material.
When making a decision about the dollar amount in an account balance based on a sample, the audit team considers the risk of incorrect acceptance to be more serious than the risk of incorrect rejection becausea. The incorrect rejection decision impairs the efficiency of the audit.b. The audit team will do additional work and discover the misstatement of the incorrect decision.c. The incorrect acceptance decision impairs the effectiveness of the audit.d. Sufficient appropriate audit evidence will not have been obtained.
the susceptibility of an account balance or class of transactions to misstatements that could be material, individually or when aggregated with misstatements in other balances or classes, assuming that there were no related internal control is called : Select one: a. control risk b. audit risk c. detection risk d. inherent risk
As the risk of material misstatement increases, the amount of evidence the auditor will accumulate should: Oc. Stay the same b. Increase a. Decrease d. Is indeterminate
To allocate the preliminary estimate of materiality to the accounts, the auditor might consider A. The relative variability of the accounts. B.The size, in absolute terms, of each account. C.Using the audit risk equation to calculate the amount of materiality to each account. D.Adjusting detection risk for each account to arrive at consistent materiality amounts across accounts.
The risk of incorrect rejection and the risk of underreliance relate to thea. Effectiveness of the audit.b. Efficiency of the audit.c. Preliminary estimates of performance materiality.d. Tolerable misstatement.
In deciding upon the acceptable risk of incorrect acceptance for an account, an auditor considers each of the following except a. Audit risk. b.Tolerable error. c.The risk that internal controls fail to detect material misstatements that have occurred. d. The risk that analytical procedures and other tests fail to detect material errors that occur and that are not detected by internal control.
Which of the following statements is associated with analytical procedure test? a. It helps to identify the errors in journal and ledger. b. It helps to test the internal control system. c. It helps to study the comparison of relationships among balance sheet accounts. d. It helps to discover detailed misstatements in the financial statements.