The Auditor Should Be Alert to the Risk of Material

question 78

True/False

The auditor should be alert to the risk of material misstatements when cash flows from operations are negative and net income and revenues have increased.

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Definitions:

External Validity

The extent to which the findings of a study can be generalized to other situations, populations, or time periods.

Confirmation Bias

An inclination to look for, comprehend, prioritize, and bring to mind details in a way that affirms someone's preconceived notions or assumptions.

Premonitions

A feeling or intuition of a future event, especially one of significant importance, without a rational basis.

Independent Variable

An independent variable is a variable that is manipulated or changed in an experiment to test its effects on dependent variables.