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.

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Definitions:

Cost of Goods Manufactured

The total production cost of goods completed during a specific period, including labor, material, and overhead costs.

Raw Materials

The basic, unprocessed materials used in manufacturing to produce finished goods.

Work in Process

Work in process (WIP) refers to the materials and labor that are in the production process but have not yet been completed or transformed into finished goods.

Manufacturing Product

The end result of the manufacturing process, which is the production of goods in a factory.