As a Result of Tests of Controls,an Auditor Assessed Control

question 79

Multiple Choice

As a result of tests of controls,an auditor assessed control risk too low and decreased substantive procedures.This assessment occurred because the true deviation rate in the population was:

• A)More than the risk of overreliance based on the auditor's sample.
• B)More than the deviation rate in the auditor's sample.
• C)Less than the risk of overreliance based on the auditor's sample.
• D)Less than the deviation rate in the auditor's sample.

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Definitions:

Profit-maximizing Output

Profit-maximizing Output is the level of production at which a business achieves the highest possible profit, determined by analyzing costs and revenues to find the most efficient production level.

Purely Competitive

Refers to a market structure characterized by many buyers and sellers, free entry and exit, and a homogeneous product, leading to price-taking behavior.

Revenue and Cost

Refers to the total income generated from business activities before expenses are subtracted, and the expenses incurred in generating that revenue, respectively.

Short Run

In economics, a period in which at least one input is fixed, limiting the firm's ability to adjust to changes in the market.