When External Users Place Heavy Reliance on the Financial Statements

question 25

Multiple Choice

When external users place heavy reliance on the financial statements it is appropriate that

• A) audit risk be increased.
• B) inherent risk be decreased.
• C) inherent risk be increased.
• D) audit risk be decreased.

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Definitions:

Evaluative Criteria

The characteristics, attributes, or dimensions that consumers use to compare and judge the merits and drawbacks of products and services.

Internal Search

The cognitive process that consumers engage in by recalling stored information from memory to make a decision.

External Search

The process of seeking information from outside resources, such as consumer reports or expert opinions, before making a purchase decision.

Recollection Search

The act of retrieving memories or information from one's own experiences to make decisions or solve problems.