Which of the following best describes the concept of risk assessment on which auditors can provide independent assurance?
A. Developing client acceptance and continuance practices that minimize the likelihood of lawsuits against the auditor.
B. The risk that financial statements are misstated because of fraud.
C. Whether management has systems in place to evaluate and effectively manage the entity's business risks.
D. The risk that financial statements are misstated because of error or fraud.
Answer: C
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Which of the following statements is CORRECT?
A. Logically, it is easier to estimate the betas associated with capital budgeting projects than the betas associated with stocks, especially if the projects are closely associated with research and development activities. B. The beta of an "average stock," which is also "the market beta," can change over time, sometimes drastically. C. If a newly issued stock does not have a past history that can be used for calculating beta, then we should always estimate that its beta will turn out to be 1.0. This is especially true if the company finances with more debt than the average firm. D. During a period when a company is undergoing a change such as increasing its use of leverage or taking on riskier projects, the calculated historical beta may be drastically different from the beta that will exist in the future. E. If a company with a high beta merges with a low-beta company, the best estimate of the new merged company's beta is 1.0.
________ allows firms to sell products, advertise, purchase supplies, bypass intermediaries, track inventory, and eliminate paperwork.
a. Social networking b. E-commerce c. Blogging d. Video sites e. None of the above
Quality may be defined as ______.
a. the product’s conformance to design specifications b. the product’s fitness for its unintended use c. the long term service contract associated with the product d. the product’s usefulness for different applications