Which of the Following Is a Definition of Control Risk

question 20

Multiple Choice

Which of the following is a definition of control risk?

• A)The risk that a material misstatement will not be prevented or detected on a timely basis by the client's internal controls.
• B)The risk that the auditor will not detect a material misstatement.
• C)The risk that the auditor's assessment of internal controls will be at less than the maximum level.
• D)The susceptibility of material misstatement assuming there are no related internal controls, policies, or procedures.

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Definitions:

Retained Earnings

The portion of net income not distributed as dividends but retained by the company to reinvest in its core business or to pay debt.

Adjusted Trial Balance

An adjusted trial balance is a list of all the accounts of a company, including any adjustments, showing the final balances to be used for preparing financial statements.

Income Statement

Financial statement that displays a company’s revenues and expenses, and ultimately its profit or loss, over a particular period, offering insight into its operational efficiency.

Adjusted Trial Balance

A list of all accounts and their balances after adjustments have been made for errors, accruals, and deferrals, used to verify the balance of debits and credits.