An Audit Should Be Designed to Obtain Reasonable Assurance of Detecting

question 29

Multiple Choice

An audit should be designed to obtain reasonable assurance of detecting material misstatements due to:

• A)Errors.
• B)Errors and fraud.
• C)Errors,fraud,and noncompliance with laws with a direct effect on financial statement amounts and others.
• D)Errors,fraud and noncompliance with all laws.

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Definitions:

Marginal Revenue

The additional income received from the sale of one more unit of a product or service.

Competitive Market

A market environment where numerous sellers and buyers exist, ensuring no single entity can dictate the price of a product or service.

Revenue

The aggregate revenue from goods sold or services provided that form the main activities of a business.

Profit-Maximizing Firms

Companies that operate with the goal of making the highest possible profit given their resources and market conditions.