Which of the Following Is Not a Reason for Audits

question 31

Multiple Choice

Which of the following is not a reason for audits of financial statements of public companies?

• A)Potential bias in providing information.
• B)Greater likelihood of fraud in large public companies.
• C)Complexity of the processing systems.
• D)Remoteness between a user and the organization.

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs, showing how much revenue contributes to covering fixed costs.

Fixed Budget

A budget that remains constant regardless of changes in the level of activity or volume, typically used for planning purposes.

Variable Costs

Outlays that fluctuate according to the amount of production or volume of sales.

Flexible Budget Performance Report

A report comparing actual operating results to a budget that adjusts with changes in the volume of activity.