During Which Phase(s)of the Financial Statement Audit Does the Auditor

question 50

Multiple Choice

During which phase(s) of the financial statement audit does the auditor "evaluate evidence" when using a risk assessment approach?

• A)the risk assessment phase
• B)the risk response phase
• C)the reporting phase
• D)the performance and reporting phases

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Definitions:

Target Pretax Income

The income a company aims to achieve before deducting taxes, often set for budgeting or goal-setting purposes.

Budgeted Income Statement

A financial report projecting revenue, expenses, and net income for a future period, based on management's expectations.

Degree of Operating Leverage

A measurement of how a company's operating income responds to a change in sales, indicating the level of fixed versus variable costs.

Total Contribution Margin

The difference between sales revenue and variable costs, representing the total earning potential before fixed costs are deducted.