3. Which of the following is the best example of a business risk that may result in a material misstatement at the overall financial statement level? a) New competitors in a market in which the business had a monopolyb) Employee theft of an immaterial petty cash fund c) A seasonal decline in demand for a product that has an unlimited shelf life d) A lack of adequate documentation on health and safety guidelines

4. Healthy K9 Ltd. is a small online business that sells homemade organic dog food. The cost to make one bag of dog food is $25, and the selling price is $40 per bag. Based on discussions with the owner, you have noted that the inventory is recorded at cost. The owner also tells you that, at year end, she had a significant amount of inventory on hand that would have spoiled, so she sold bags to her friends and family for $20 each.Based on the information above, what is the possible assertion-level risk of material misstatement a) Inventory valuation b) Inventory accuracy c) Sales accuracy d) Sales cutoff

Which of the following scenarios could indicate a going-concern issue?a) An entity that is economically dependent on the bank as its only source of funding b) Loss of a customer representing 1% of total sales c) Loss of a long-time sales manager, replaced by someone with similar experienced) Discontinuance of dividends, where there is a history of issuance