Why Should the Auditor Understand the Client's Business Factors-Such as Information

question 74

Multiple Choice

Why should the auditor understand the client's business factors-such as information about related parties?

• A) It may indicate areas of increased control risk.
• B) It may indicate areas of increased client business risk.
• C) It may indicate areas of increased audit risk.
• D) It may indicate reasons not to accept the engagement.

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Definitions:

Equilibrium Quantity

The quantity of goods or services that is supplied and demanded at the equilibrium price, where demand equals supply.

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, service, or commodity.

Gallon

A unit of measurement for volume, primarily used in the United States, equal to 128 fluid ounces, or approximately 3.785 liters.

Quantity Supplied

Quantity Supplied is the amount of a good or service that producers are willing and able to offer for sale at a particular price over a given period.