Which of the Following Statements Is True

question 27

Multiple Choice

Which of the following statements is true?

• A) The risk that material misstatement will not be prevented or detected on a timely basis by the internal control can be reduced to zero by effective control activities.
• B) Cash is more susceptible to theft than an inventory of coal because it has a greater inherent risk.
• C) Detection risk is a function of the efficiency of an auditing procedure.
• D) The existing levels of inherent risk, control risk and detection risk can be changed at the discretion of the auditor.

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Definitions:

Business Combination

The coming together of separate entities or businesses into one reporting entity via a merger, acquisition, or consolidation.

Business Combination

The process of merging two or more companies into one, through various forms such as mergers, acquisitions, or consolidations.

Circumstances

Circumstances refer to the specific conditions or facts affecting a situation, event, or decision-making process at a given time.

Goodwill

An intangible asset that arises when a business is purchased for more than the fair market value of its net assets, reflecting the value of the business’s reputation, brand, and other unquantifiable assets.