Risk of Incorrect Rejection Is Defined as _______

question 57

Multiple Choice

Risk of incorrect rejection is defined as _______.

• A)the risk that the auditor concludes that a material misstatement does not exist when it does exist
• B)the risk that the auditor concludes that a material misstatement exists when it does not exist
• C)the risk that an auditor incorrectly rejects a client
• D)the risk that management may reject the audit opinion issued by the auditor

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Definitions:

Significance Level

The threshold below which a p-value indicates that the observed data is unlikely to have occurred by chance, leading to rejection of the null hypothesis.

Null Hypothesis

A statement in statistical analysis that proposes there is no significant effect or difference between certain variables or groups.

Statistical Test

A method of making decisions or inferences about population parameters based on sample data, often involving a comparison between an observed test statistic and a critical value.

Power

The probability that a statistical test will correctly reject a false null hypothesis; it measures a test's sensitivity to detect an effect if there is one.