Whenever Sampling Is Used in an Audit Procedure, Uncertainty Will

question 22

Multiple Choice

Whenever sampling is used in an audit procedure, uncertainty will be present. The two sources of this uncertainty are:

• A) sampling risk and nonsampling risk.
• B) compliance risk and substantive risk.
• C) inherent risk and control risk.
• D) detection risk and occurrence risk.
• E) detection risk and inherent risk.

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Definitions:

Insurance Policy

A contract between an insurance provider and an individual or entity, offering financial protection against loss or damage as specified in the policy terms.

Adjusting Journal Entry

A record documented at the closing of an accounting cycle to distribute revenues and expenses to the appropriate period they took place in.

General Ledger

A general ledger is a comprehensive record of a company's financial transactions over the life of the organization, serving as the primary source for preparing financial statements.

Supplies Expense

Costs associated with the consumption of supplies necessary for the daily operations of a business, recognized as an expense in the accounting period in which they are used.