Which of the Following Is Not True with Respect to the Risk

question 94

Multiple Choice

Which of the following is not true with respect to the risk of incorrect acceptance?

• A)It results in an efficiency loss to the auditor.
• B)It occurs when the auditor's sample indicates that the account balance is fairly stated.
• C)It occurs when the true misstatement in the account balance exceeds tolerable misstatement.
• D)The auditor can measure the exposure to this risk when using statistical sampling applications.

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Definitions:

Legal Structure

The framework within which a business operates, including its designation as a corporation, partnership, sole proprietorship, or other legal entity.

Barrier To Entry

Factors that make it difficult for new competitors to enter a market, such as high start-up costs or regulatory hurdles.

Price-Control Legislation

Laws enacted by a government to regulate the prices charged for goods and services in the market, often to protect consumers.

Invisible Hand Principle

The tendency of market prices to direct individuals pursuing their own interests to engage in activities promoting the economic well-being of society.