The risk that material misstatements have occurred in transactions entering the accounting system is
A) Audit risk.
B) Inherent risk.
C) Control risk.
D) Detection risk.

Question

Quizplus · Accepted Answer

Inherent risk is the risk that material misstatements exist in transactions, regardless of the effectiveness of controls in place. This risk is inherent to the nature of the transactions being processed and cannot be completely eliminated through control procedures. The other options, including audit risk, control risk, and detection risk, are all related to the effectiveness of controls and detection procedures implemented by the auditor.

The Risk That Material Misstatements Have Occurred in Transactions Entering