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

question 103

Multiple Choice

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

• A)This risk provides the auditor with an efficiency loss.
• B)This risk results in the auditor making an incorrect conclusion about the client's account balance or class of transactions.
• C)This risk occurs when the sample results suggest that the account balance is fairly stated.
• D)This risk is controlled by the auditor in determining sample size under monetary unit sampling (MUS).

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Definitions:

Real Rate of Return

The rate of profit or growth rate after adjusting for inflation.

Nominal Rate

The interest rate before adjustments for inflation, as opposed to the real rate, which is adjusted for inflation.

Inflation

How quickly the average price of goods and services elevates, lessening the power to purchase.

APR

Annual Percentage Rate, the annual rate charged for borrowing or earned through an investment, which includes all fees and costs associated with the transaction.