Which One of the Following Is an Example of the Concept

question 11

Multiple Choice

Which one of the following is an example of the concept of inherent risk?

• A) Humans make more errors than computers; therefore, a manual accounting system is riskier than a computerised system.
• B) Audits with larger sample sizes are less risky than those with smaller sample sizes.
• C) Loans receivable for a finance company are less likely to be collectible than those of a bank.
• D) Accounting systems with vouchers have many more controls built in, so the risk that there will be errors on the financial statements is reduced.