Some account balances, such as those for foreign currency transactions or leases, are the results of complex calculations.The susceptibility to material misstatements in these types of accounts is defined as:
A) detection risk.
B) audit risk.
C) sampling risk.
D) inherent risk.

Question

Quizplus · Accepted Answer

The susceptibility to material misstatements in complex accounts such as those for foreign currency transactions or leases is considered to be inherent risk. This is because these accounts are inherently more complex and carry a higher risk of misstatement. Inherent risk is one of the components of audit risk and cannot be reduced through audit procedures.

Some Account Balances, Such as Those for Foreign Currency Transactions