As the Risk of Material Misstatement Increases, Detection Risk Should

question 75

Multiple Choice

As the risk of material misstatement increases, detection risk should:

• A)medium increase.
• B)decrease.
• C)stay the same.
• D)Is indeterminate.

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Definitions:

Liabilities

Financial obligations or debts owed by a company to third parties, which must be settled over time through the transfer of assets, provision of services, or other means.

Supplies Expense

Costs associated with consumable items used in the operation of a business, such as office supplies, which are expensed as used.

Total Expenses

The sum of all costs and expenses, operational or non-operational, incurred by a business during a specific period.

Service Revenues

Income earned by a company for the services it provides to customers, excluding goods sold.