An Audit That Involves Obtaining and Evaluating Evidence in Order

question 65

Multiple Choice

An audit that involves obtaining and evaluating evidence in order to determine whether certain financial or operating activities of an entity conform to specified conditions, rules, or regulations is a(n) :

• A) internal audit.
• B) external audit.
• C) operational audit.
• D) compliance audit.
• E) financial statement audit.

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Definitions:

Buyers

Individuals or entities that purchase goods or services from sellers in exchange for money or other valuable considerations.

Sellers

Individuals or entities that offer goods or services for sale to potential buyers.

Deadweight Losses

Economic inefficiencies that occur when the market equilibrium is not achieved, often due to external interference such as taxes or monopolies, resulting in a loss of total surplus.

Distort Incentives

When external factors or policies alter the natural motivations that influence individual or business decisions, potentially leading to inefficient outcomes.