ACC 406 t/f Questions and Answers|2025 Revised Update | 100% Correct Complete Solutions

ACC 406 t/f Questions and Answers|2025 Revised
Update | 100% Correct Complete Solutions
The FASB definition of materiality is stated in explicit quantitative terms.

False

Preliminary judgments about materiality are set for planning purposes and

may be changed as the audit progresses.

True

In audit planning, the auditor should recognize that there may be several

levels of materiality.

True

The auditor's preliminary judgment about materiality cannot be made

before the financial statement date, when annual amounts become known.

False

Materiality judgments involve both quantitative and qualitative

considerations.

True

Industry-wide data is relevant to the development of analytical procedures

for a specific client.

True

, Inquiries of management are usually sufficient to resolve significant

differences between results and expectations that are the result of analytical

procedures.

False

Analytical procedures often provide the auditor with clues about whether

an account is more likely to be overstated or understated.

True

The primary reason for performing analytic procedures in audit planning is

to identify accounts that may contain misstatements and to design an audit

that will respond to the risk of material misstatement.

True

Free Cash Flow = Cash Flow from Operations - Capital Expenditures.

True

Inventory Turnover (in days) = Inventory / Cost of Goods Sold x 365

True

Return on Equity = Assets Turnover x Profit Margin.

False

Gross Operating Cycle = AR Turnover x Inventory Turnover.

False