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:

Agency Termination

Agency termination refers to the process or act of legally ending the relationship between a principal and their agent, under the terms set out in their agreement or under the law.

Third Parties

Individuals or entities who are not directly involved in a legal agreement or contract but may be affected by it.

Actual Notice

A legal term referring to the direct and clear knowledge about a fact or situation.

Orally

Orally means communicated or expressed through spoken words rather than in written form or by any other means of communication.