Inherent Risk Is the

question 119

Multiple Choice

Inherent risk is the

• A) Probability that some accounts are more susceptible to misstatement than others.
• B) Probability that the client's internal control policies and procedures will fail to detect material misstatements.
• C) Probability that material misstatements have occurred in transactions entering the accounting system used to develop financial statements.
• D) Probability that the auditor may not detect material misstatements in the financial statements.

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Definitions:

Tax Revenue

Income that the government receives from taxpayers, including both individuals and businesses, used to fund public services and obligations.

Tax Concessions

Special exemptions, deductions, or credits provided in the tax code to encourage certain business activities or investments.

Qualitative Characteristics

The attributes that make the information provided in financial statements useful to users, such as relevance and reliability.

Financial Reports

Documents that provide an overview of a company's financial condition, including balance sheet, income statement, and cash flow statement.