All Else Being Equal, as the Level of Materiality Decreases

question 5

Multiple Choice

All else being equal, as the level of materiality decreases, the amount of evidence required will:

• A) remain the same.
• B) increase.
• C) decrease.
• D) change in an unpredictable fashion.
• E) fluctuate randomly.

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Definitions:

Fixed Cost

A cost that does not change with an increase or decrease in the amount of goods or services produced or sold.

Marginal Cost

The escalation in the entire cost linked to the output of an additional unit.

Average Cost

The cost per unit is determined by dividing the overall production cost by the total units produced.

Average Total Cost

The total cost of production (fixed and variable costs combined) divided by the quantity of output produced.