If cost of storing inventory is very high, then the Economic Order Quantity calculation will suggest which of the following?

Question 2 options:

	More frequent orders with large quantities ordered each time
	Less frequent orders with smaller quantities ordered each time
	Less frequent orders with large quantities ordered each time
	More frequent orders with smaller quantities ordered each time

Question 6What is the sample size in the below situation? Please round off to the nearest (whole) number.

Tolerable Misstatement: $150,000

Expected misstatement: $50,000

Details on accounts receivables are given in the table below. All balances greater than $50,000 will be audited (not sampled). The remaining transactions will be sampled

Confidence level desired is 85%

Question 6 options:

	146
	162
	183
	132

Question 7 Suppose you're given the task of auditing receivables. You want to calculate the expected misstatement to calculate the sample size. Which of the following items will help you calculate the expected misstatement?

1. Experience from prior year(s)
2. Client's inherent risk and / or control risk
3. The size of your audit team

Question 7 options:

	1 and 3
	1, 2 and 3
	1 and 2
	2 and 3

Q8. Suppose your audit client is a manufacturer of wheat crackers, and thereby relies heavily on wheat. However, the wheat prices have been fluctuating a lot recently, and that has exposed your client to purchase price risk (and thereby increased your assessment of inherent risk). Your client wants your help in devising a good hedging strategy. Which of the following can the client undertake to reduce their exposure to fluctuating wheat prices?

Question 8 options:

	Buy call options on wheat which will help them set a maximum price for their wheat purchase
	Buy put options on wheat which will help them set a minimum price for their wheat purchase
	You will suggest no hedging since fluctuating wheat prices are a regular operational risk
	You will suggest investing in a large climate-controlled warehouse and keep buying wheat whenever prices fall