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Unformatted text preview: Chapter 9 Take Home Quiz 1. Auditors commonly allocate materiality to balance sheet accounts rather than income statement accounts because most income statement misstatements have a(n) _____ effect on the balance sheet. a. less b. equal c. undetermined d. more 2. What is the primary means of dealing with risk in planning decisions related to audit evidence? a. Selection of more effective tests of details of balances. b. Application of the audit risk model. c. Establish a lower preliminary judgment about materiality. d. All of the above. 3. Inherent risk is _______ related to detection risk and _______ related to the amount of audit evidence. a. directly, inversely b. directly, directly c. inversely, inversely d. inversely, directly 4. The five steps in applying materiality are listed below in random order. 1. Estimate the combined misstatement. 2. Estimate the total misstatement in the segment. 3. Set preliminary judgment about materiality....
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This note was uploaded on 03/06/2011 for the course ECON 435 taught by Professor Galven during the Spring '11 term at Ill. Chicago.
- Spring '11