The Likelihood of Assessing Control Risk Too High Is the Risk

question 167

Multiple Choice

The likelihood of assessing control risk too high is the risk that the sample selected to test controls:

• A) Does not support the auditor's planned assessed level of control risk when the true operating effectiveness of internal control justifies such an assessment.
• B) Contains misstatements that could be material to the financial statements when aggregated with misstatements in other account balances or transactions classes.
• C) Contains proportionately fewer monetary errors or deviations from prescribed internal controls than exist in the balance or class as a whole.
• D) Does not support the tolerable error for some or all of management's assertions.

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Definitions:

Paid-In Capital

Paid-in capital is the amount of money a company has received from shareholders in exchange for shares of stock.

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, as stated by its issuer.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, typically with dividends that must be paid out before dividends to common stockholders.

Par Value

A nominal or face value assigned to a share of stock by the company's charter, which may not reflect the actual market value.