Auditors May Identify Conditions During Fieldwork That Change or Support

question 24

Multiple Choice

Auditors may identify conditions during fieldwork that change or support a judgment about the initial assessment of fraud risks. Which of the following is not a condition which should alert an auditor that the initial assessment should be changed?

• A) The subsidiary ledger agrees with the general ledger.
• B) discrepancies in the accounting records
• C) unusual relationships between the auditor and management
• D) missing or conflicting evidence

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Definitions:

Marginal Revenue

The uplift in revenue achieved by marketing an additional unit of a product or service.

Marginal Cost

The cost incurred by producing one additional unit of a product, a key concept in economic decision-making regarding production levels.

Short-Run Supply Curve

A graphical representation that shows the quantity of goods a firm is willing and able to produce and sell at different price levels over a short period, not allowing for all factors of production to vary.

MC Curve

The Marginal Cost curve, which shows the increase in total cost that arises from producing one more unit of a good or service.