What Are the Three Main Reasons Why the Auditor Should

question 25

Multiple Choice

What are the three main reasons why the auditor should properly plan engagements?
1) to enable the auditor to obtain sufficient appropriate evidence
2) to help keep audit costs reasonable
3) to avoid misunderstandings with the client
4) to earn audit fees for the firm.

• A) 1, 2, 3
• B) 1, 2, 4
• C) 1, 3, 4
• D) 2, 3, 4

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Definitions:

Firm's Total Profit

The total income of a firm after subtracting all costs from its total revenues.

Profit Maximizing

The process of adjusting production and sale levels to achieve the highest possible profit based on existing market conditions.

Level of Output

The quantity of goods or services produced by a company, industry, or economy within a given period.

Farmer

An individual engaged in agriculture, raising living organisms for food or raw materials.