Risk of material misstatement at the assertion level determines the nature, timi

Question

Risk of material misstatement at the assertion level

determines the nature, timing, and extent of further audit procedures.

refers to risks that are pervasive to the financial statements as a whole.

is only relevant to account balances.

consists of business risk and inherent risk.

Fictitious revenues

increase accounts receivable turnover.

lower accounts receivable turnover.

have no impact on the gross margin percentage.

understate the gross margin percentage.

determines the nature, timing, and extent of further audit procedures.

refers to risks that are pervasive to the financial statements as a whole.

is only relevant to account balances.

consists of business risk and inherent risk.

Fictitious revenues

increase accounts receivable turnover.

lower accounts receivable turnover.

have no impact on the gross margin percentage.

understate the gross margin percentage.

Explanation / Answer

Ans1 determines the nature, timing, and extent of further audit procedures.

Ans 2 increase accounts receivable turnover.

Fictitious revenues are revenues that are recognised on non-existent sales or services. These are not actual sales, but are fictitious sales booked to inflate revenues.

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