The Risk That an Auditor Will Conclude, Based on Substantive

question 19

Multiple Choice

The risk that an auditor will conclude, based on substantive procedures, that a material error does not exist in an account balance when, in fact, such an error does exist is referred to as:

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

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Definitions:

Domestic Producer Surplus

The difference between the amount domestic producers are willing to accept for a good or service and the actual amount they receive.

World Price

The world price is the price at which goods are traded internationally, determined by global supply and demand conditions.

Government Payments

Funds distributed by the government to individuals, businesses, or other governmental entities, which can include subsidies, grants, or welfare payments.

Point Elasticity

A measure of how responsive the quantity demanded or supplied of a good is to a change in its price, calculated at a particular point on the demand or supply curve.