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:

Credited

Recorded or acknowledged as having received something, often used in financial contexts to indicate an addition to certain accounts.

Selling Price

The price at which a product or service is sold to customers.

Retained Earnings

The portion of a company's profits that is not distributed as dividends to shareholders but is instead reinvested in the business or kept as a reserve.

Cash Available

The amount of cash that a company or an individual has on hand or can easily access.