While Performing a Substantive Test of Details During an Audit

question 9

Multiple Choice

While performing a substantive test of details during an audit, the auditor determines that the sample results support the conclusion that the recorded account balance is materially misstated.It is, in fact, NOT materially misstated.This situation illustrates the risk of:

• A) assessing control risk too low.
• B) assessing control risk too high.
• C) incorrect rejection.
• D) incorrect acceptance.

---

Definitions:

Fundamental Business

Refers to the basic concepts, principles, and practices that form the foundation of a company's operations and strategic objectives.

Financial Information

Data related to the financial performance and financial position of an entity, including income statements, balance sheets, and cash flow statements.

Owners' Equity

The residual interest in the assets of a business after deducting liabilities, essentially the ownership interest in the business.

Store Equipment

The fixtures and tools used in a retail store to display and manage products, excluding inventory.