Which of the Following Statements Represents an Audit Failure

question 5

Multiple Choice

Which of the following statements represents an audit failure?

• A)A client goes bankrupt or has serious financial difficulty.
• B)An auditor failed to detect a material misstatement in the financial statements.
• C)An auditor cannot collect the audit fees from the client.
• D)An auditor is sued by a third party.

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Definitions:

Aggregate Demand

The cumulative need for all economic goods and services, pegged at a singular overall price level during a distinct time period.

Substantial Unemployment

A situation where there is a significantly high rate of unemployment in a particular area, reflecting a large number of people unable to find jobs.

Wages

Compensation paid to employees for their labor or services, typically calculated on an hourly, daily, or piecework basis.

Great Depression

A severe worldwide economic downturn that took place mostly during the 1930s, leading to high unemployment, low output, and deflation.