Which of the Following Statements Is Not Correct If the Actual

question 133

Multiple Choice

Which of the following statements is not correct if the actual misstatement is $1,000,the upper limit on misstatement is $10,000,and the tolerable misstatement is $12,000?

• A) There is a (1 minus the risk of incorrect acceptance) probability that the true misstatement in the account balance exceeds $10,000.
• B) The allowance for sampling risk is $9,000.
• C) There is a (1 minus the risk of incorrect acceptance) probability that the true misstatement in the account balance is less than $10,000.
• D) The account balance appears to be fairly recorded.

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Definitions:

Maximum Rate

The highest possible level or speed at which something can be achieved or occurs, often used in the context of production or performance.

Joint Cost

Costs that are incurred in producing multiple products prior to the point at which the products become separately identifiable.

Split-off Point

The stage in a process at which various products become separately identifiable and their costs can be separately assigned.

Joint Products

Two or more products that are produced from a common input.