Which of the Following Statements Best Describes What Is Meant

question 43

Multiple Choice

Which of the following statements best describes what is meant by a 1% level of detection risk?

• A)High detection risk and low audit risk.
• B)High detection risk and high audit risk.
• C)Low detection risk and high audit risk.
• D)Low detection risk and low audit risk.

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Definitions:

Work in Process

Inventory that includes goods that are in the process of being manufactured but are not yet complete.

Finished Goods Inventory

Manufactured goods that are complete and ready for sale.

Lower of Cost

A principle typically applied in the valuation of inventory and financial assets, stating to record the asset at the lower of its historical cost or current market value.

Net Realizable Value

The estimated selling price in the ordinary course of business, minus the estimated costs of completion and the necessary costs to make the sale.