Evidence Obtained Directly by the Auditor Is More Competent Than

question 59

Multiple Choice

Evidence obtained directly by the auditor is more competent than information obtained indirectly.Which of the following is NOT an example of the auditor's direct knowledge?

• A) physical examination
• B) inquiry
• C) computation
• D) observation

---

Definitions:

Explicit Costs

Direct, out-of-pocket payments for expenses incurred in conducting business, such as rent, salaries, and materials.

Economic Profits

The disparity between the amount a business earns in total and the sum of its outright and inferred expenses.

Explicit Costs

Direct, out-of-pocket payments for goods and services that are used in the production of other goods and services.

Implicit Costs

The opportunity costs of using resources that a firm already owns, not involving direct monetary payment.