.Using the Audit Risk Model,answer the Following Questions

question 34

Essay

.Using the audit risk model,answer the following questions.
Required:
A)What is the risk of incorrect acceptance for Jack and for Jill?
B)Based on your answer in part (A),which auditor will have to collect the most evidence? Explain your reasoning.
C)What effect does differing assessments of control risk have on the sample size of accounts receivable? Explain.

• A)What is the risk of incorrect acceptance for Jack and for Jill?
• B)Based on your answer in part (A),which auditor will have to collect the most evidence? Explain your reasoning.
• C)What effect does differing assessments of control risk have on the sample size of accounts receivable? Explain.

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Definitions:

Marginal Cost

The change in total production cost that comes from making or producing one additional unit.

Shut Down

A short-term decision by a firm to cease operations and production when the market price is below its variable costs, to minimize losses.

Economic Loss

A situation where total costs exceed total revenues, leading to a negative economic profit.

AVC

Average Variable Cost, an economic metric reflecting the variable costs (such as labor and materials) per unit of output.