The Risk That an Auditor's Procedures Will Lead to the Conclusion

question 65

Multiple Choice

The risk that an auditor's procedures will lead to the conclusion that a material error does not exist in an account balance when, in fact, such error does exist is referred to as

• A) audit risk.
• B) inherent risk.
• C) control risk.
• D) planned detection risk.

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Definitions:

John Maynard Keynes

A British economist whose theories on the causes of prolonged unemployment and the role of government intervention in economies formed the basis of Keynesian economics.

Full Employment

A condition in the economy where all potential labor forces are utilized in the most economically effective manner.

Market Economy

An economic system where decisions regarding investment, production, and distribution are based on supply and demand, and prices of goods and services are determined in a free price system.

Aggregate Demand

The sum total of all economic needs for goods and services, appraised at a constant overall price level in a stated period.