Reference no: EM132672890

Problem 1: The following are reasons in applying professional skepticism except,

Option 1: Overlooking usual circumstances

Option 2: Over-generalizing

Option 3: Using inappropriate assumptions

Option 4: None of the above

Problem 2: Assuming that the acceptable range for setting the preliminary materiality is 5% to 10%, which of the following entity is more likely geared towards the upper range (i.e., 10%)?

Option 1: Listed client in the Philippines Stock Exchange

Option 2: Client holding a secondary license from the Philippine Securities and Exchange Commission

Option 3: Family-owned retail client with no debt financing scheme

Option 4: Client in a highly regulated industry such as banks and insurance companies

Problem 3: Which of the following items pertain to control risk?

Option 1: The susceptibility of risky assets to defalcation

Option 2: Auditor's (external) testing procedures

Option 3: Auditor's (internal) testing procedures and responsibilities

Option 4: Complex accounting treatment of a loan with an embedded prepayment option