In the Audit of ABC Company,where Materiality Was Assessed as $15,000,three

question 71

Multiple Choice

In the audit of ABC Company,where materiality was assessed as $15,000,three misstatements were detected: an improper asset capitalization of $18,000,an employee theft of $5,000 and a $5 posting error.In accordance with CAS 260,the auditor must report which of these misstatements to the audit committee?

• A)Only the $18,000 misstatement.
• B)Both the $18,000 and $5,000 misstatement,but not the $5 error.
• C)All three misstatements must be reported.
• D)None of the misstatements need be reported to the audit committee,just to an appropriate level of management.

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Definitions:

Marginal Revenue

The increased income derived from selling an additional unit of a product or service.

Pure Monopolist

A single seller in a market with no close substitutes for the product or service, having complete control over its price.

Monopoly Output

The quantity of goods or services produced by a monopoly firm, which is determined by the intersection of the marginal cost and marginal revenue curves.

Profit-Maximizing

The process or strategy of adjusting production levels, pricing, or other operational factors to achieve the highest possible profit.