Question

Question 1

Auditors frequently refer to the terms audit assurance, overall assurance, and level of assurance to refer to ________.

A. detection risk

B. audit report risk

C. acceptable audit risk

D. inherent risk

Question 2

If an auditor believes the chance of financial failure is high and there is a corresponding increase in business risk for the auditor, acceptable audit risk would likely:

A. be reduced

B. be increased.

C. remain the same.

D. be calculated using a computerized statistical package.

Question 3

If it is probable that the judgment of a reasonable person will be changed or influenced by the omission or misstatement of information, then that information is, by definition of FASB Statement No. 2:

A. material.

B. insignificant.

C. significant.

D. relevant.

Question 4

When auditors allocate the preliminary judgment about materiality to account balances, the materiality allocated to any given account balance is referred to as:

A. the materiality range.

B. the error range.

C.tolerable materiality.

D. tolerable misstatement.

Question 5

When the auditor is attempting to determine the extent to which external users rely on a client's financial statements, they may consider several factors except for: