As a Result of Sampling Procedures Applied as Tests of Controls,an

question 94

Multiple Choice

As a result of sampling procedures applied as tests of controls,an auditor incorrectly assesses control risk lower than appropriate.The most likely explanation for this situation is that

• A) the deviation rates of both the auditor's sample and the population exceed the tolerable rate of deviation.
• B) the deviation rates of both the auditor's sample and the population are less than the tolerable rate of deviation.
• C) the deviation rate in the auditor's sample is less than the tolerable rate of deviation, but the deviation rate in the population exceeds the tolerable rate of deviation.
• D) the deviation rate in the auditor's sample exceeds the tolerable rate of deviation, but the deviation rate in the population is less than the tolerable rate of deviation.

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Definitions:

Service Business

A business model focused on delivering non-physical products or services to its consumers.

Overhead

The indirect costs or expenses associated with operating a business, including administrative, office, and rented space expenses.

Materials Ledger

A record of the quantity and value of materials on hand, received, and issued during a period.

Subsidiary Ledger

A detailed ledger that supplements a general ledger by providing detailed information for individual accounts, such as accounts payable or receivable.