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NEW QUESTION: 1
Analytical procedures used in planning an audit should focus on:
A. Assessing the adequacy of the available audit evidence.
B. Reducing the scope of tests of controls and substantive tests.
C. Enhancing the auditor's understanding of the client's business.
D. Providing assurance that potential material misstatements will be identified.
Answer: C
Explanation:
Explanation/Reference:
Explanation:
Choice "C" is correct. Analytical procedures used in planning the audit should focus on enhancing the
auditor's understanding of the client's business and the transactions and events that have occurred since
the last audit date.
Choice "A" is incorrect. Analytical procedures used in planning do not reduce tests of controls or
substantive tests.
Choice "B" is incorrect. Analytical procedures used in planning are not designed to identify material
misstatements.
Choice "D" is incorrect. Audit evidence has not yet been gathered during the planning process, so its
adequacy cannot be assessed.
NEW QUESTION: 2
If a group has been defined with access times of 9 AM to 5 PM, Monday through Friday. When can a member of that group log in?
A. during the specified time frame, but must log out by 5 PM
B. during that time frame and can remain logged in indefinitely
C. during that time frame but is automatically logged out at 5 PM
D. at any time but must renew their login at 9 AM each day
Answer: B
NEW QUESTION: 3
An apartment building has a net operating income of $35,400. The mortgage interest expense is
$ 8,500 and the income tax expense is $2,600. The average market capitalization rate for similar properties is 9.20%. What is the property's value according to the income approach?
A. $384,783
B. $292,391
C. $264,130
Answer: A
Explanation:
Net operating income (NOI) is calculated after deducting operating expenses from the gross rent. Income taxes are NOT deducted in calculating NOI). In addition, NOI is the income generated from operating a real estate investment and is NOT affected by the interest expense (i.e., financing choice).
The property's estimated value can be found as follows: Estimated value = Annual Net Operating Income
/ Market Capitalization Rate = 35,400 / 0.092 = $384,783
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