ACC 406 MCQ Questions and Answers|2025
Revised Update | 100% Correct Complete Solutions
Materiality underlies the application of generally accepted auditing standards, particularly
the
field work and reporting standards.
Which of the following is not a weakness of analytical procedures?
Analytical procedures are usually very cost effective.
The auditor makes preliminary judgments about materiality levels in planning the audit.
This materiality assessment is referred to as:
planning materiality.
When setting the level of materiality on a particular engagement, the auditor is required to
consider
both the unique circumstances pertaining to the entity and the information needs of the users
In a normal audit, the relationship between the level of materiality used to plan the
engagement and the level of materiality used to evaluate evidence is
the former may be either higher or lower than the latter.
In planning the audit, the auditor should assess materiality at two levels:
the financial statement level and the account balance level.
Materiality at the account balance level is stated in planning an audit because:
, the auditor verifies account balances in reaching an overall conclusion on the
fairness of the financial statements.
In making a preliminary judgments about materiality, the auditor initially determines the
aggregate (overall) level of materiality for each statement. For planning purposes, the
auditor should use the:
smallest aggregate level.
Quantitative guidelines for setting materiality levels are currently provided by:
neither GAAP nor GAAS
Professional standards recognize that a misstatement that is quantitatively immaterial
may be qualitatively material. In regard to these items, professional standards require
the auditor to:
be on the alert for them.
Tolerable misstatement" is the termed used to indicate materiality at the:
account balance level.
Numerous factors influence the effectiveness of analytical procedures. Which of the
following factors would tend to make analytical procedures less effective?
Relationships that are dynamic
Which of the following rations is not considered to be a key measure of profitability?
Inventory turnover
Revised Update | 100% Correct Complete Solutions
Materiality underlies the application of generally accepted auditing standards, particularly
the
field work and reporting standards.
Which of the following is not a weakness of analytical procedures?
Analytical procedures are usually very cost effective.
The auditor makes preliminary judgments about materiality levels in planning the audit.
This materiality assessment is referred to as:
planning materiality.
When setting the level of materiality on a particular engagement, the auditor is required to
consider
both the unique circumstances pertaining to the entity and the information needs of the users
In a normal audit, the relationship between the level of materiality used to plan the
engagement and the level of materiality used to evaluate evidence is
the former may be either higher or lower than the latter.
In planning the audit, the auditor should assess materiality at two levels:
the financial statement level and the account balance level.
Materiality at the account balance level is stated in planning an audit because:
, the auditor verifies account balances in reaching an overall conclusion on the
fairness of the financial statements.
In making a preliminary judgments about materiality, the auditor initially determines the
aggregate (overall) level of materiality for each statement. For planning purposes, the
auditor should use the:
smallest aggregate level.
Quantitative guidelines for setting materiality levels are currently provided by:
neither GAAP nor GAAS
Professional standards recognize that a misstatement that is quantitatively immaterial
may be qualitatively material. In regard to these items, professional standards require
the auditor to:
be on the alert for them.
Tolerable misstatement" is the termed used to indicate materiality at the:
account balance level.
Numerous factors influence the effectiveness of analytical procedures. Which of the
following factors would tend to make analytical procedures less effective?
Relationships that are dynamic
Which of the following rations is not considered to be a key measure of profitability?
Inventory turnover
