The Exception Rate the Auditor Will Permit in the Population

question 119

Multiple Choice

The exception rate the auditor will permit in the population and still be willing to reduce the assessed level of control risk is called the:

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

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Definitions:

Contingent Consideration

An obligation of a buyer to transfer additional assets or equity interests to the seller after meeting certain conditions post-acquisition.

Liabilities

Liabilities are financial obligations or debts that a company owes to others, which are expected to be paid in the future.

Investment Account

An account designated for holding a portfolio of investments, such as stocks, bonds, real estate, and mutual funds, different from a standard savings account.

Retained Earnings

The portion of a company's profits not distributed to shareholders as dividends but kept for reinvestment in the business or to pay off debt.