When Making Decisions About Evidence for a Given Audit, the Auditor's

question 81

Multiple Choice

When making decisions about evidence for a given audit, the auditor's goal is to obtain a sufficient amount of timely, reliable evidence that is relevant to the information being verified, and to do so:

• A) at the lowest possible cost.
• B) no matter what the cost involved in obtaining such evidence.
• C) only if the cost is reasonable.
• D) at any cost because the costs are billed to the client.

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Definitions:

Diminishing Returns

The principle stating that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after a certain point.

Marginal Cost Curve

A graphical representation showing how the cost of producing one additional unit of a good changes as the production volume varies.

Total Product

The overall quantity of output that a firm produces, typically measured within a specific time period under given levels of input.

Marginal Cost

The additional cost incurred in the production of one more unit of a good or service.