In Addition to Direct Impacts on the Financial Statements,the Auditor

question 45

Multiple Choice

In addition to direct impacts on the financial statements,the auditor also needs to consider indirect effects.An assessment of client objectives and strategies can reveal issues that could lower income or cause contingent liabilities.Which of the following could cause lost sales,increases in warranty expenses,and product liability claims?

• A)poor product quality
• B)excessive advertising
• C)ineffective projections
• D)inaccurate budgets

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Definitions:

Path-goal Theory

A leadership theory that focuses on how leaders motivate their followers to achieve goals by clarifying the path, removing obstacles, and offering rewards.

Emotional Needs

Fundamental human needs for emotional support and validation, including the need for love, acceptance, and a sense of belonging.

Positive Exchanges

Interactions that are mutually beneficial and foster positive relations between individuals or groups.

LMX

Leader-Member Exchange, a theory describing the dynamics of relationships between leaders and followers, emphasizing the importance of reciprocal influence and negotiated roles.