John, CPA, is evaluating the risk of material misstatement on an engagement. For each of the following, please indicate what effect the situation described would have on the affected risk component. Effect on Risk Component A. Increase Inherent Risk B. Decrease Inherent Risk C. Increase Control Risk D. Decrease Control Risk E. Increase Detection Risk Situations F. Decrease Detection Risk

1. The entity's purchasing agent is required to obtain approval from senior management for purchases in excess of $2,000. 2. A good portion of the entity's fixed asset base consists of capitalized leasehold items. 3. John plans to perform extensive tests of details surrounding the payroll function. 4. The entity keeps a large quantity of cash on hand. 5. John plans to perform all of its testing related to cash at year-end. 6. The entity's computer applications are not protected by password controls. 7. Employees report the hours worked each week without supervisory oversight. 8. John will obtain evidence primarily from external sources in testing the entity's receivables. 9. The entity's financial statements do not require use of significant estimates. 10. John plans to perform only limited tests of details related to the purchasing function.