Silka Is in the Process of Performing an Audit

question 37

Multiple Choice

Silka is in the process of performing an audit.During the audit,Silka decided to change materiality.A valid reason for this would be

• A)a new user of the financial statements was identified.
• B)a fraud was discovered in the accounts payable section.
• C)materiality required the auditors to perform too many tests.
• D)too many errors were found during testing.

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Definitions:

Production Capacity

The maximum output that a company or economy can produce under normal conditions within a given period, often influenced by available resources and technology.

Diminishing Returns

A principle indicating that as more of a variable input is added to a fixed input, the added output from each additional unit of input will eventually decrease.

Resource Labor

The work force considered as an economic resource, emphasizing the skills and abilities workers bring to the economy.

Marginal Output

The additional quantity of output that is produced by using one more unit of a particular input, holding all other inputs constant.