After extrapolating the results of performing substantive tests on a sample of accounts from the accounts receivable subsidiary ledger,Allen CPA 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 material misstatement exists in a financial statement assertion when, in fact, the assertion is fairly stated. This is the case described, where Allen CPA incorrectly concluded that the accounts receivable balance was materially misstated.

After Extrapolating the Results of Performing Substantive Tests on a Sample