After Extrapolating the Results of Performing Substantive Tests on a Sample

question 43

Multiple Choice

After extrapolating the results of performing substantive tests on a sample of accounts from the accounts receivable subsidiary ledger,Allen CA concluded that the accounts receivable balance was materially misstated.In fact,the balance was materially correct.This situation illustrates the risk of ________.

• A)incorrect rejection
• B)incorrect acceptance
• C)assessing control risk too low
• D)assessing control risk too high

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Definitions:

Security Interest

A legal claim or right on assets granted to a creditor to secure the repayment of a debt.

Car Buyer

An individual or entity that purchases a vehicle for personal use, commercial use, or resale.

Principal Debtor's

Pertains to the main individual or entity obligated to repay a debt or loan.

Lack of Capacity

The legal inability of an individual or entity to engage in certain activities or enter into contracts due to age, mental state, or other disqualifications.