If the Auditor Decides to Reduce Acceptable Audit Risk,planned Detection

question 9

Multiple Choice

If the auditor decides to reduce acceptable audit risk,planned detection risk

• A)increases.
• B)decreases.
• C)stay the same.
• D)cannot be determined.

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Definitions:

Modigliani

Franco Modigliani, an economist known for his work in corporate finance, especially the Modigliani-Miller theorem regarding capital structure and the dividend irrelevance theory.

Miller

Often refers to a person who operates a mill, a machine to grind a cereal crop to make flour.

Risk

The exposure to potential financial loss or gain, often evaluated in decisions involving investment or finance.

Leverage

The strategy of using borrowed money to increase the potential return of an investment.