When Performing the Substantive Tests on an Account Balance,the Auditor

question 43

Multiple Choice

When performing the substantive tests on an account balance,the auditor is concerned about two aspects of sampling-based decision errors: (1) the risk of incorrect rejection (RIR) and (2) the risk of incorrect acceptance (RIA) .Which of the following is true about RIR and RIA?

• A)RIR is of greater concern to the auditor than the RIA.
• B)RIA is of greater concern to the auditor than the RIR.
• C)RIA and the RIR are of equal importance to the auditor.
• D)Neither the RIR nor the RIA need be considered by the auditor.

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Definitions:

JIT Environment

Just-In-Time environment, a production strategy that strives to improve a business's return on investment by reducing in-process inventory and associated carrying costs.

Layout Tactics

Strategies used in arranging machinery, equipment, and workforce within an operational area to optimize productivity and efficiency.

Waste

Describes materials or substances that are no longer useful in their current form and are discarded or disposed of.

Push System

A production strategy where products are manufactured based on anticipated demand, pushing them through to the end of the production line.