The Situation and Circumstances Can Dictate the Level of Certain

question 34

Multiple Choice

The situation and circumstances can dictate the level of certain risks no matter what the auditor does. However, the auditor is always able to decide to reduce one of the following risks:

• A) control risk.
• B) risk of management fraud.
• C) detection risk.
• D) inherent risk.

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Definitions:

Par Value

The nominal or face value of a bond, share of stock, or coupon as stated by the issuer, which may not be indicative of the market value.

Debit Balance

A debit balance is the amount that remains in a particular account within a bookkeeping ledger, primarily indicating money owed or expenses that have surpassed credits.

Retained Earnings

This part of shareholders' equity reflects the accumulated net income retained for reinvestment in the business, rather than being paid out in dividends.

Paid-In Capital

The total amount of capital that shareholders have directly contributed to a company in exchange for shares.