TRUE-FALSE QUESTIONS

1. Complex auditing judgments and decisions often involve accounts that require subjective estimates by management.

2. The inventory account does not require any subjective estimates by management.

3. Auditors make materiality assessments to help in planning the audit evidence to obtain and in evaluating the audit evidence that was obtained.

4. Determining materiality is based solely on quantitative factors.

5. When evaluating identified misstatements, the auditor only needs to consider misstatements in the current year, and not misstatements from the prior year.

6. A misstatement that is intentional is not assessed any differently by the auditor than a misstatement that is unintentional.

7. Auditors can choose to test the client's warranty reserves using primarily tests of controls and substantive analytical procedures.

8. When auditing pension obligations, the auditor likely uses a specialist to assist the audit team.

9. Goodwill is the excess of the purchase price over the FMV of the acquired company's tangible assets, identifiable intangible assets, and liabilities.