When an Entity Moves into a Significant New Line of Business

question 35

Multiple Choice

When an entity moves into a significant new line of business, all of the following increase except:

• A)client risk.
• B)acceptable audit risk.
• C)risk of material misstatement.
• D)entity business risk.

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Definitions:

Inventory Valuation

The method or process by which the total value of a company's inventory is determined, based on the cost of goods, market value, or an agreed-upon valuation mechanism.

Aggregation Criteria

The conditions or guidelines used to combine similar items or transactions for reporting purposes.

Business Activities

Business activities encompass all actions a company engages in, such as buying, selling, manufacturing, and marketing, aimed at generating profits.

General Corporate Costs

Expenses incurred by a company that are necessary for its overall administration and management rather than for specific projects or divisions.