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.

Question

Quizplus · Accepted Answer

Incorrect rejection occurs when an auditor concludes that a balance is materially misstated when it is actually correct, leading to unnecessary additional audit work.

After Extrapolating the Results of Performing Substantive Tests on a Sample