What is the audit purpose most directly served by obtaining this understanding

What is the audit purpose most directly served by

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fluctuations. What is the audit purpose most directly served by obtaining this understanding? a. To assist the auditor to accurately interpret information obtained during an audit. b. To allow the auditor to more accurately perform tests of controls. c. To decide whether it will be necessary to perform analytical procedures. d. To enable the auditor to accurately identify significant deficiencies. Explanation Choice "a" is correct. As part of audit planning, the auditor should obtain an understanding of the entity's business. This understanding enables the auditor to better understand events, transactions, and practices that may affect the financial statements, to plan and perform appropriate audit tests, and to properly understand and evaluate the results of those tests. Choice "d" is incorrect. Obtaining an understanding of the entity's business would not be particularly helpful in identifying significant deficiencies. Significant deficiencies in internal control are typically identified during the fieldwork stage of the audit. Choice "b" is incorrect. Obtaining an understanding of the entity's business would not result in a more accurate performance of tests of controls. Accurate performance of audit tests is dependent upon factors such as existence of an appropriate audit trail, client cooperation, training and supervision of audit staff, etc. Choice "c" is incorrect. Analytical procedures are always required in an audit during the planning and overall review stages.
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Page 1 of 2 Becker Professional Education Registered to: Dominique DAntonio Question CPA-03405 Initially the nominal interest rate is 8 percent and the inflation rate is 6 percent. One year later, the nominal interest rate rises to 12 percent while the inflation rate rises to 10 percent. It follows that the real rate of interest: a. Insufficient information given for an answer. b. Has risen. c. Has remained the same. d. Has fallen. Explanation Choice "c" is correct. The real interest rate equals the nominal interest rate minus the inflation rate. Thus, the real interest rate in the first year is: real interest rate = 8% 6% = 2% and the real interest rate in the next year is: real interest rate = 12% 10% = 2%.
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Page 1 of 2 Becker Professional Education Registered to: Dominique DAntonio Question CPA-03489 Under monopoly, strategic plans focus on: a. Profitability from production levels that maximize profits. b. Maintaining the market share and being responsive to market conditions related to sales price. c. Maintaining the market share, ensuring product differentiation, and adapting to price changes or required changes in production volume. d. Maintaining the market share and planning for enhanced product differentiation. Explanation Choice "a" is correct. Under monopoly, strategic plans ignore market share and focus on profitability from production levels that will maximize profits.
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