While Performing a Substantive Test of Details During an Audit

question 16

Multiple Choice

While performing a substantive test of details during an audit, the auditor determined that the sample results supported the conclusion that the recorded account balance was materially misstated. It was, in fact, not materially misstated. Such a situation illustrates the risk of:

• A)incorrect rejection.
• B)incorrect acceptance.
• C)assessing control risk too high.
• D)assessing control risk too low.

Employ mathematical operations to calculate amount of food or material needed in a recipe or project.

Utilize mathematics to plan and execute small-scale construction or renovation projects.

Understand concepts of area and coverage to estimate material needed for painting.

Master the concept of rate to predict the outcomes in different scenarios.

---

Definitions:

Economies of Scale

The cost advantage achieved when increasing the scale of production leads to a reduction in the average cost of each unit produced.

Diseconomies of Scale

The phenomenon where companies experience an increase in average costs per unit when production is scaled up beyond a certain point.

Specialized Activities

Tasks or operations that require specific expertise or skills, often focused on a particular aspect of a business or industry.

Economies of Scale

The cost advantage that arises with increased output of a product, resulting from efficiencies in production processes.