Chapter_07 - Chapter 07 Student 1 Which of the following...

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Chapter 07 Student: ___________________________________________________________________________ 1. Which of the following inventory items is likely to have high inherent risk? A. Internet computer software. B. Cement. C. Washing machines. D. Office furniture. 2. Which of the following actions cannot be taken by the auditors to reduce audit risk? 3. Some account balances, such as those for foreign currency transactions or leases, are the results of complex calculations. The susceptibility to material misstatements in these types of accounts is defined as: 4. Which of the following statements is true?
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5. Your audit client has a new management incentive scheme in place, with the bonus calculated on the basis of the increase in net profit over the previous year. The basis of the bonus will remain the same for the next three years. Your client has had a poor year and will not meet its budget or last year's net profit. Which of the following represents an inherent risk? A. Insufficient provisions. B. Next year's expenses taken up this year. C. Next year's sales incorrectly taken up this year. D. Overstatement of debtors. 6. With respect to fraud and error, which of the following should be part of an auditor's planning of the audit engagement? 7. Which of the following does not represent an opportunity to commit fraud?
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