#5: Detection Risk is not necessarily assessed, but it can be ascertained from the assessment of Inherent and Control Risk as those are inversely related to Detection Risk. Detection Risk is controlled by the auditor while the other two exist independently from the audit.
@@DariusClarki75 fair. I was assuming cash was collected but I guess the debit could have been a/r. I’m actually in intermediate accounting right now and just seeing what the test is like. You give great explanations. Thx for the response.
#5 I was like D) Detection Risk too. But I was not sure because AICPA is pretty clear when it says that "...audit risk (AR) consists of (a) the risk (consisting of inherent risk and control risk)... and and (b) the risk (detection risk)...These components of audit risk may be assessed in quantitative terms, such as percentages, or in nonquantitative terms such as high, medium, or low risk." AICPA only addressess RMM as "..the risk of material misstatement (RMM) as the auditor's combined assessment of inherent risk and control risk..." I was looking at AU section 312. So the answer is C because RMM is not an "assessment", its a given (IRxCR). Right?
#5: Detection Risk is not necessarily assessed, but it can be ascertained from the assessment of Inherent and Control Risk as those are inversely related to Detection Risk. Detection Risk is controlled by the auditor while the other two exist independently from the audit.
I had the immediate answer of B but got tripped up on C for question 1! Thanks for explaining each possible answer :)
D is the Answer for 5th question
IR AND CR. ARE ASSESSED but cannot be changed by auditor.
@@jamielam7367 cr can be changed
It's gotta be D. BECAUSE although RMM is not assessed explicitly, it is implicitly as its comprised of Control Risk and Inherent Risk.
Liked! Thanks Darius
Superb ..Darius
Hi Darius I say C
I'm a little stuck on 1C. Isn't that unearned revenue and therefore an accrued liability?
Unearned revenue is when you collect cash in advance. Do you see anything in the facts that cash was collected?
@@DariusClarki75 fair. I was assuming cash was collected but I guess the debit could have been a/r. I’m actually in intermediate accounting right now and just seeing what the test is like. You give great explanations. Thx for the response.
these are nice MCQ's
#5 I was like D) Detection Risk too. But I was not sure because AICPA is pretty clear when it says that "...audit risk (AR) consists of (a) the risk (consisting of inherent risk and control risk)... and and (b) the risk (detection risk)...These components of audit risk may be assessed in quantitative terms, such as percentages, or in nonquantitative terms such as high, medium, or low risk." AICPA only addressess RMM as "..the risk of material misstatement (RMM) as the auditor's combined assessment of inherent risk and control risk..." I was looking at AU section 312.
So the answer is C because RMM is not an "assessment", its a given (IRxCR). Right?
I choose B.
What's the answer?
D
D as in Darius
Answer is Detection Risk
He sounds like Christopher Walken during the first minute
The time is killer. Need to give us more time man
Detection risk
D
D
D