The Risk of Material Misstatement Due to Fraud Relating to Revenue

question 96

Multiple Choice

The risk of material misstatement due to fraud relating to revenue recognition should be

• A)approached in a manner that is identical to control risk assessment.
• B)given lower priority to the risk of embezzlement.
• C)ordinarily presumed by the auditor.
• D)assumed to have been considered by the audit committee.

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Definitions:

Downward-Sloping Demand

A market condition where demand for a product decreases as its price increases, illustrating the inverse relationship between price and demand.

Pure Monopolist

A single seller in a market that has complete control over the supply of a product and where no close substitutes exist.

Reselling

The act of selling again or selling something that has already been sold or owned, often seen in markets for goods like tickets, merchandise, and real estate.