Detection Risk Is the Risk That the Auditor Will Not

question 32

Multiple Choice

Detection risk is the risk that the auditor will not detect material misstatements in the accounts. To limit detection risk to an acceptable level, the auditor ________.

• A) performs substantive tests
• B) tests controls
• C) gains an understanding of the internal control system
• D) applies statistical methods

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Definitions:

Wage Rates

This is the remuneration paid to employees based on the duration of their work, reflecting the value or price of labor in a job market.

Labor Demand

The quantity of workers that employers are willing and able to hire at a given wage rate, in a given time period.

Derived Demand

The demand for a factor of production or intermediate good that results from the demand for another good or service.

LCD Screens

Liquid Crystal Display screens, a technology used in monitors, televisions, and mobile devices for displaying images, utilizing liquid crystals to control light passage.