Inherent Risk

question 103

Multiple Choice

Inherent risk

• A)exists because all control structures are flawed in some ways.
• B)is the likelihood that material misstatements exist in the financial statements of the firm.
• C)is associated with the unique characteristics of the business or industry of the client.
• D)is the likelihood that the auditor will not find material misstatements.

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Definitions:

Inductive Perceptions

The cognitive process of making generalized conclusions or theories based on specific observations or experiences.

Subliminal Perception

The capacity to perceive and respond to stimuli that are presented below the threshold of awareness.

Selective Perception

The process by which individuals perceive what they want to in media messages while ignoring opposing viewpoints due to personal attitudes and beliefs.

Stroboscopic Perception

The visual phenomenon where continuous motion is represented by a series of short or instantaneous samples, as seen in motion pictures.