Which of the Following Statements Regarding Audit Risk (AudR)and Accounting

question 37

Multiple Choice

Which of the following statements regarding audit risk (AudR) and accounting risk (AccR) is FALSE?

• A)AccR is largely geared to reflect business risks of the auditee.
• B)AccR is the material difference between an estimate involving future events and its outcome.
• C)AudR is something that is relevant to the auditee but not to the auditor.
• D)The auditor has to consider both AudR and AccR and somehow combine them using professional judgment.

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Definitions:

Corporations

Legal entities that are separate and distinct from their owners, capable of owning assets, incurring liabilities, and engaging in business activities.

Partnerships

A legal form of business operation between two or more individuals who share management and profits.

Depression

A severe and prolonged downturn in economic activity, marked by significant declines in income, employment, and production, often more severe than a recession.

Gross Investment

The total amount spent on purchasing or constructing new capital goods over a specific time period, without accounting for depreciation.