If Planned Detection Risk Is Reduced, the Amount of Evidence

question 66

Multiple Choice

If planned detection risk is reduced, the amount of evidence the auditor accumulates will

• A) increase.
• B) decrease.
• C) remain unchanged.
• D) be indeterminate.

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Definitions:

Marginal Revenue

The additional income generated from selling one more unit of a product or service.

Marginal Costs

The supplementary expense incurred from making one more unit of a product or service.

Fixed Costs

Costs that do not vary with the level of output in the short term, such as rent, salaries, and loan payments.

Total Revenue

The total amount of money received by a firm from the sale of its goods or services, calculated as price times quantity sold.