The Text Described Seven Types of Audits Common in Accounting

question 8

Multiple Choice

The text described seven types of audits common in accounting practice. Which of the following statements about them is most true?

• A)An adverse opinion in a financial statement audit is evidence that an investigative audit is needed.
• B)Expectancy theory can be useful in many types of audits.
• C)Both A and B are true.
• D)Neither A nor B is true.

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Definitions:

Normal Good

A good or service whose consumption increases when income increases and falls when income decreases, price remaining constant.

Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good, signifying how the demand for a good can stretch or change.

Senior-Citizen Discounts

Reduced prices offered to elderly individuals, typically those aged 65 and over, as a benefit for their age.

Cash Rebates

Refunds offered to consumers as an incentive to purchase a product or service.