Chapter 8 - Chapter 8 Take Home Quiz 1. a. b. c. d. 2. a....

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Chapter 8 Take Home Quiz 1. The most widely used profitability ratio is the: a. quick ratio. b. profit margin. c. return on assets. d. earnings per share. 2. It is easier and more common to implement increased evidence accumulation for inherent risk than for acceptable audit risk because: a. inherent risk can usually be isolated to one or two accounts. b. inherent risk applies to the entire audit. c. acceptable audit risk and sample sizes are set statistically. d. acceptable audit risk does not impact on the amount of evidence which must be accumulated. 3. Which of the following statements is true regarding communications between predecessor and successor auditors? a. The burden of initiating the communication rests with the predecessor. b. The predecessor should attempt to respond fully and truthfully to the successor’s inquiries. c. The predecessor should communicate with the successor only if the client is public. d. There is no requirement that the predecessor and successor communicate. 4. The purpose of an engagement letter is to: a. document the CPA firm’s responsibility to external users of the audited financial statements. b.
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Chapter 8 - Chapter 8 Take Home Quiz 1. a. b. c. d. 2. a....

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