WGU D251 COST AND MANAGERIAL ACCOUNTING
EXAM 51 QUESTIONS WITH VERIFIED ANSWERS
What is the materiality level that an auditor uses for determining significant
accounts, significant locations, and audit procedures for those accounts and
locations? - CORRECT ANSWER Performance materiality
An auditor has determined performance materiality has been set too high at the
beginning of the audit. Which procedures should this auditor consider to detect
misstatements? - CORRECT ANSWER The auditor should perform additional
substantive audit procedures
Which risk exists at the overall financial statement level and at the assertion level
and can be categorized as involving inherent risk and control risk? - CORRECT
ANSWER Risk of material misstatement
What represents an identified and assessed risk of material misstatement that
requires special audit consideration? - CORRECT ANSWER Significant risk
What is the impact on the amount of acceptable audit risk if an auditor believes
the chance of financial failure of a client is high? - CORRECT ANSWER The
acceptable audit risk is reduced.
Which factor should lead an auditor to assess inherent risk as high? - CORRECT
ANSWER The account balance consists of a large number of complex transactions.
, Which factor would lead an auditor to assess client business risk at a higher level?
- CORRECT ANSWER The client's use of information technology is incompatible
across systems and processes.
An auditor determines overall materiality of $500,000 would be material to the
income statement and $1,000,000 would be material to the balance sheet. Which
amount would an auditor typically assess performance materiality to be for this
client? - CORRECT ANSWER 75% of $500,000
At which percentage do auditors commonly set posting materiality? - CORRECT
ANSWER 5% of planning materiality
What is quantitative evaluation? - CORRECT ANSWER Determining whether the
upper limit of the possible deviation rate exceeds the tolerable deviation rate
In which circumstance would an auditor change an audit objective to estimating
the correct value? - CORRECT ANSWER When the total estimated misstatement
exceeds the tolerable misstatement
What describes tainting percentage? - CORRECT ANSWER The percentage of
misstatement present in a logical unit
Which statement reflects a 5% risk of overreliance? - CORRECT ANSWER 95%
confidence level that the actual rate of deviation will not exceed the tolerable
deviation
EXAM 51 QUESTIONS WITH VERIFIED ANSWERS
What is the materiality level that an auditor uses for determining significant
accounts, significant locations, and audit procedures for those accounts and
locations? - CORRECT ANSWER Performance materiality
An auditor has determined performance materiality has been set too high at the
beginning of the audit. Which procedures should this auditor consider to detect
misstatements? - CORRECT ANSWER The auditor should perform additional
substantive audit procedures
Which risk exists at the overall financial statement level and at the assertion level
and can be categorized as involving inherent risk and control risk? - CORRECT
ANSWER Risk of material misstatement
What represents an identified and assessed risk of material misstatement that
requires special audit consideration? - CORRECT ANSWER Significant risk
What is the impact on the amount of acceptable audit risk if an auditor believes
the chance of financial failure of a client is high? - CORRECT ANSWER The
acceptable audit risk is reduced.
Which factor should lead an auditor to assess inherent risk as high? - CORRECT
ANSWER The account balance consists of a large number of complex transactions.
, Which factor would lead an auditor to assess client business risk at a higher level?
- CORRECT ANSWER The client's use of information technology is incompatible
across systems and processes.
An auditor determines overall materiality of $500,000 would be material to the
income statement and $1,000,000 would be material to the balance sheet. Which
amount would an auditor typically assess performance materiality to be for this
client? - CORRECT ANSWER 75% of $500,000
At which percentage do auditors commonly set posting materiality? - CORRECT
ANSWER 5% of planning materiality
What is quantitative evaluation? - CORRECT ANSWER Determining whether the
upper limit of the possible deviation rate exceeds the tolerable deviation rate
In which circumstance would an auditor change an audit objective to estimating
the correct value? - CORRECT ANSWER When the total estimated misstatement
exceeds the tolerable misstatement
What describes tainting percentage? - CORRECT ANSWER The percentage of
misstatement present in a logical unit
Which statement reflects a 5% risk of overreliance? - CORRECT ANSWER 95%
confidence level that the actual rate of deviation will not exceed the tolerable
deviation
