While performing an audit of accounts receivable,R.Allen,CPA,found that the sample results supported the conclusion that the accounts receivable balance was materially misstated.However,the balance was,in fact,not materially misstated.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

This situation is an example of incorrect rejection, where the auditor concludes that there is a material misstatement in the accounts receivable balance, when in fact the balance is not materially misstated. This could occur due to errors in the audit sample or incorrect interpretation of the results.

While Performing an Audit of Accounts Receivable,R