Which of the Following Best Describes the Concept of Risk

question 61

Multiple Choice

Which of the following best describes the concept of risk assessment on which auditors can provide independent assurance?

• A)The risk that financial statements are misstated because of fraud.
• B)The risk that financial statements are misstated because of error or fraud.
• C)Whether management has systems in place to evaluate and effectively manage the entity's business risks.
• D)Developing client acceptance and continuance practices that minimize the likelihood of lawsuits against the auditor.

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Definitions:

Y-Intercept

The y-intercept is the point where a graph intersects the y-axis, typically represented as the value of y when x equals 0.

Noncollinear Points

A set of three or more points that do not all lie on a single straight line.

Coefficient Matrix

A matrix consisting of the coefficients of the variables in a set of linear equations.

Linear Equations

Equations of the first degree, where variables are raised only to the power of one and graph as straight lines.