1. Which of the following is not a typical part of planning an audit?

	a.	Documenting the understanding with the client in an engagement letter.
	b.	Performing a physical examination of inventory.
	c.	Performing preliminary analytical procedures.
	d.	Developing an audit strategy.

2. The auditor is responsible for the selection of specific accounting principles.

True

False

3. If an auditor noted that a client's manufacturing process uses raw materials that have a volatile commodity price the auditor would likely determine that the client's inventory has a high _____ risk.

	a.	inherent
	b.	failure
	c.	control
	d.	Busines

4. The amount of misstatement an auditor is willing to accept in any given account balance is _______.

	a.	materiality
	b.	tolerable misstatement
	c.	control risk
	d.	inherent risk

5. Which assertion addresses whether transactions are recorded in the correct period?

	a.	Cutoff
	b.	Accuracy
	c.	Existence
	d.	Completeness

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