The Auditors of Smith Electronics Wish to Limit the Audit

question 13

Multiple Choice

The auditors of Smith Electronics wish to limit the audit risk of material misstatement in the test of accounts receivable to 5 percent.They believe that inherent risk is 100%,there is a 40 percent risk that material misstatement could have bypassed the client's system of internal control,and a 50 percent risk that any existing material misstatement would not have been brought to light by the auditors' analytical procedures.What is the maximum risk of incorrect acceptance the auditors should specify in their substantive tests of details of accounts receivable?

• A)5 percent.
• B)10 percent.
• C)20 percent.
• D)25 percent.

---

Definitions:

Computer

An electronic device capable of processing, storing, and retrieving data, executing a wide range of tasks according to instructions.

Muscular Systems

The system in the human body that enables movement of the body and maintains posture, comprising of all the muscles.

Skeletal Systems

The framework of bones and other connective tissues that provide support, movement, and protection for the human body.

S-shaped Segment

A segment of a structure, such as the colon, that curves twice in opposite directions resembling an "S".