Which of the Following Is Not an Important Consideration in an Auditor's

question 52

Multiple Choice

Which of the following is not an important consideration in an auditor's evaluation of an entity's business risk?

• A)The specific business risks an entity faces that may result in financial statement errors and fraud.
• B)Business risk factors that impact the ability of the entity to be profitable and survive.
• C)Audit standards include many entity business risk factors that identify circumstances that increase the likelihood of material misstatements.
• D)Audit standards require the auditor to evaluate the entity's business risk in order to provide suggestions to improve the entity's profitability.

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Definitions:

Shrink

The reduction in inventory due to factors such as theft, damage, or errors in record-keeping.

Output

The total amount of goods or services produced by a company or economy in a given period.

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, typically resulting in the reduction of cost per unit.

Aircraft Production

The process and industry involved in designing, manufacturing, and assembling aircraft.