In Government and Internal Performance Auditing,which of the Following Is

question 44

Multiple Choice

In government and internal performance auditing,which of the following is the least important consideration when performing the fieldwork?

• A) Determining the applicable generally accepted government accounting principles pronounced by the GASB.
• B) Defining problem areas or opportunities for improvement and defining program goals.
• C) Selecting and performing procedures designed to obtain evidence about operational problems and production output.
• D) Evaluating evidence in terms of economy, efficiency, and achievement of program goals.

Recognize the relationship between operating leverage and fixed and variable costs.

Understand the effect of financial leverage on a firm's interest expense and operating leverage.

Comprehend the importance of EBIT in evaluating a firm's operating performance.

Recognize the risks associated with high operating leverage and how it affects business risk.

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Definitions:

MRP

Marginal Revenue Product; the additional revenue generated from employing one more unit of a resource or factor of production.

Substitution Effect

The change in demand for a good or service that occurs when its price increases or decreases, leading consumers to substitute it with other goods or services that are relatively more or less expensive.

Output Effect

The impact on the total production of goods and services in an economy resulting from changes in demand, supply, technology, or factors of production.

Factors of Production

The basic inputs used to produce goods and services, including land, labor, capital, and entrepreneurship.