Evidence Obtained Directly by the Auditor Is More Competent Than

question 35

Multiple Choice

Evidence obtained directly by the auditor is more competent than information obtained indirectly. Which of the following is NOT an example of the auditor's direct knowledge?

• A) Inquiry
• B) Computation
• C) Physical examination
• D) Observation

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Definitions:

Economic Losses

Financial losses suffered by an individual or organization, often as a result of unfavorable business conditions or activities.

Price-Taker Market

A market condition in which individual buyers or sellers cannot influence the market price through their own actions.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, reflecting the true profitability of a firm's operations.

Demand Increase

A situation where there is a rise in consumer desire to purchase goods or services, leading to higher quantities demanded at the same price levels.