In Statistical Terms, Acceptable Risk of Assessing Control Risk Too

question 56

Multiple Choice

In statistical terms, acceptable risk of assessing control risk too low (ARACR) corresponds with

• A) sampling risk.
• B) inherent risk.
• C) control risk.
• D) nonsampling risk.

---

Definitions:

Periodic Inventory System

An inventory accounting system where updates are made on a periodic basis, rather than continuously, often used for calculating cost of goods sold at the end of an accounting period.

Sales Returns & Allowances

Reductions in sales revenue for products returned by customers or allowances given for damaged goods.

Merchandise Inventory

Goods that a company holds for the purpose of selling to customers in the ordinary course of business.

Periodic Inventory Method

An inventory accounting system where updates are made periodically, often leading to adjustments at the end of an accounting period.