$6-43.$ Answer the following questions relating to the assessment of the risk of material

misstatements.

a$.$ Which of the following is most likely to be close to the upper end of the spectrum of inher$-$

ent risk?

$(1)$ A relevant assertion.

$(2)$ A significant risk.

$(3)$ A reasonably possible misstatement.

$(4)$ An inherent risk factor.b$.$ Absent other changes, an increase in the likelihood of occurrence will have what effect on

an assertion's placement on the spectrum of inherent risk?

$(1)$ Decrease.

$(2)$ Increase.

$(3)$ Indeterminate.

$(4)$ No effect.

c$.$ Absent other changes, an increase in likelihood of occurrence and a decrease in its

magnitude will have what effect on an assertion's placement on the spectrum of inher$-$

ent risk?

$(1)$ Decrease.

$(2)$ Increase.

$(3)$ Indeterminate.

$(4)$ No effect.

d$.$ The spectrum of inherent risk is a concept most directly relating to:

$(1)$ Determination of materiality levels.

$(2)$ Only audits of small public companies.

$(3)$ Significant risks relating to accounts, transactions, and balances.

$(4)$ Whether inherent risk should be considered on an audit.

$e.$ In identifying significant risks, which is least likely to be considered?

$(1)$ Inherent risk factors.

$(2)$ Internal control.

$(3)$ Likelihood relating to inherent risk.

$(4)$ Magnitude relating to inherent risk.

f$.$ Which of the following is correct relating to significant risks?

$(1)$ Analytical procedures are applied in identifying them.

$(2)$ Detection risk determines their existence.

$(3)$ Their existence depends upon a consideration of their likelihood and magnitude.

$(4)$ They exist when their likelihood of occurrence is at least remote.