The Auditor Determines That Mathews Company Occupies the 3ʳᵈ Floor

question 25

Multiple Choice

The auditor determines that Mathews Company occupies the 3ʳᵈ floor of an office tower for which it pays no rent.The most likely explanation is:

• A)they got lucky the landlord hasn't noticed the lack of payments.
• B)landlord has weak internal controls over billings.
• C)a related party transaction in which a major shareholder owns the office tower.
• D)Matthews Company is engaging in fraudulent activities.

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Definitions:

Price Level

An index of the average price of goods and services in an economy over a period, indicating inflation or deflation.

Exchange-Rate Effect

The impact of changes in the relative value of currencies on the economy, affecting import and export prices, investment flows, and overall economic performance.

Aggregate Demand

The full volume of demand for goods and services in an economy, priced at a particular level, within a designated period.

Aggregate Supply

Aggregate supply represents the total amount of goods and services that producers are willing and able to supply at a given overall price level in an economy.