Which of the Following Is the Risk That Audit Tests

question 77

Multiple Choice

Which of the following is the risk that audit tests will not uncover existing exceptions in a sample?

• A)Sampling risk
• B)Nonsampling risk
• C)Audit risk
• D)Detection risk

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in volume or activity levels, providing a more useful tool for performance evaluation.

Variable Costs

Costs that vary directly with the level of production or business activity. Examples include raw materials, packaging, and direct labor.

Fixed Costs

Fixed Costs are business expenses that remain constant regardless of the volume of goods or services produced, such as rent, salaries, and loan payments.

Favorable Volume Variance

A metric that indicates a company has produced or sold more than initially anticipated, leading to increased profitability.