In Testing Accounts Receivable,an Auditor Sends Out Positive Confirmation Requests

question 3

Multiple Choice

In testing accounts receivable,an auditor sends out positive confirmation requests to 100 randomly selected customers.A customer returns the confirmation indicating that the balance is correct when,in fact,the balance is overstated.This is an example of:

• A)Projected misstatement.
• B)Sampling error.
• C)Standard error.
• D)Nonsampling error.

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Definitions:

Domestic Producers

Companies or individuals that manufacture or produce goods and services within their home country, as opposed to importing them from abroad.

Tariffs and Quotas

These are trade policies where tariffs are taxes on imported goods, and quotas are limits on the amount of a good that can be imported.

Import Substitution

An economic policy aimed at replacing foreign imports with domestic production to promote local industries.

Foreign Competition

Competition that domestic companies face from companies located in other countries, influencing markets, pricing, and innovation.