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