Which of the following components of the upper limit on misstatements is based on the possibility that the sampling interval contains a greater degree of misstatement than the item examined by the auditor?
A)Basic allowance for sampling risk.
B)Incremental allowance for sampling risk.
C)Projected misstatement.
D)Risk of incorrect acceptance.

Question

Quizplus · Accepted Answer

Incremental allowance for sampling risk accounts for the possibility that the misstatement in the sampling interval may be greater than the misstatement found in the item examined by the auditor. Basic allowance for sampling risk accounts for the inherent risk in sampling, projected misstatement is the estimated misstatement in the population based on the misstatement found in the sample, and risk of incorrect acceptance is the risk that the auditor accepts the population as not materially misstated when it actually is.

Which of the Following Components of the Upper Limit on Misstatements