Whenever Auditors Use Sampling, They Risk Making Incorrect Conclusions About

question 72

Multiple Choice

Whenever auditors use sampling, they risk making incorrect conclusions about the population.The risk that the auditor concludes that controls are nore effective than they actually are is known as the:

• A)risk of overreliance.
• B)risk of underreliance.
• C)risk that the sample is not representative of the population.
• D)risk that the sample conclusions cannot be useful because of nonprobability sampling.

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Definitions:

Pre-acquisition Equity

The equity value of a company before being acquired by another entity, used to assess the financial status and baseline worth of the target company.

Revaluation Surplus

An increase in the carrying amount of an asset, recognized in equity, when its fair value exceeds its carrying amount.

Pre-acquisition Entry

An accounting entry made to adjust the values of the acquirer's and acquiree's assets and liabilities to fair value at the acquisition date.

Non-current Assets

Assets held for long-term use in business operations, not expected to be converted into cash within the next year.