The Risk Which the Auditor Is Willing to Take in Accepting

question 80

Multiple Choice

The risk which the auditor is willing to take in accepting a control as being effective when the true population exception rate is greater than a tolerable rate is the

• A) finite correction factor.
• B) tolerable exception rate.
• C) acceptable risk of overreliance.
• D) estimated population exception rate.

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Definitions:

Amortization Table

A schedule that details each payment on an amortizing loan (such as a mortgage), including how much of each payment is interest vs. principal and the remaining balance.

Semiannual Interest

Semiannual interest is interest that is calculated and paid twice a year on investments or loans.

Straight-Line Method

A depreciation technique that allocates an equal amount of depreciation expense over the useful life of an asset.

Semiannual Interest

Interest payments made twice a year on investments or loans.