Which of these statements is the most correct?

Question

Quizplus · Accepted Answer

A high volume of transactions flowing through an entity's cash account could lead to errors, omissions, or fraudulent activities, therefore, increasing the likelihood of misstatements in the cash balance. This directly contributes to a higher level of inherent risk for cash balance assertions, which is the risk of material misstatement before considering the effectiveness of internal controls. Option B is incorrect because detection risk is the risk that auditors may fail to detect a material misstatement in financial statements even though it exists. It is not affected by the volume of transactions but rather the effectiveness of the audit procedures used. Option C is incorrect because the disclosure assertion relates to the completeness and accuracy of financial statement disclosures, not the cash balance. Option D is incorrect because rights and obligations assertion relates to whether the entity holds legal or contractual rights to assets and whether liabilities are obligations of the entity, not related to the volume of transactions.

Which of These Statements Is the Most Correct