Your Audit Client Has Many Different Types of Accounts Receivable

question 20

Multiple Choice

Your audit client has many different types of accounts receivable: Canadian,American,and other international accounts;and short- and long-term accounts.There are also some sales on consignment.The company has used forward exchange contracts to reduce its exposure due to foreign exchange fluctuations.How will this affect the audit engagement?

• A)control risk will increase
• B)inherent risks of error will decrease
• C)risk of material misstatement increases
• D)audit risk will be increased

Calculate a firm’s total revenue and total cost at its profit-maximizing level of output.

Analyze the implications of market price changes on firm’s profit-maximizing output and decision to stay in business.

Understand the role of marginal revenue and marginal cost in the production decision-making of price-taker firms.

Recognize the impact of regulatory changes on industry competition and pricing.

---

Definitions:

Transfer Price

The price at which goods or services are sold between divisions within the same company or between affiliated companies.

Selling Division

A division within a company responsible for the sales and distribution of the company's products or services.

Transfer Price

The price at which goods and services are sold between units of the same organization.

Selling Division

The division or department within a company responsible for the sales and distribution of its products or services.