On the Basis of Audit Evidence Gathered and Evaluated,an Auditor

question 25

Multiple Choice

On the basis of audit evidence gathered and evaluated,an auditor decides to increase the assessed level of risk of material misstatement from that originally planned.To achieve an overall audit risk level that is substantially the same as the planned audit risk level,the auditor would

• A) Decrease amount of substantive testing.
• B) Decrease detection risk.
• C) Increase detection risk.
• D) Increase materiality levels.

---

Definitions:

Shutdown Point

The point where a firm's revenue is not enough to cover its variable costs, leading to a decision to cease production temporarily.

Short Run

In economics, a period during which at least one input, like factory size or machinery, is fixed and cannot be changed, as opposed to the long run where all factors can be varied.

Long Run

A period in economic analysis where all inputs can be adjusted and there are no fixed factors of production.

Economic Profits

The difference between total revenue and total costs, including both explicit and implicit costs, reflecting the true profitability of a company.