Concluding that the book value of inventory is correct when it is materially misstated is an example of which of the following risks?
A)Incorrect rejection.
B)Incorrect acceptance.
C)Insufficient sample size.
D)None of the above.

Question

Quizplus · Accepted Answer

This is an example of incorrect acceptance, which occurs when the auditor concludes that a material misstatement does not exist when it actually does. In this case, the auditor is accepting a misstated inventory book value as correct.

Concluding That the Book Value of Inventory Is Correct When