ACTIVITY RATIO Definition

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ACTIVITY RATIO is any accounting ratio that measures a firms ability to convert different accounts within their balance sheets into cash or sales.

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ABNORMAL GAIN see NORMAL LOSS.

NONSAMPLING RISK is audit risk not due to sampling. An auditor may apply a procedure to all transactions or balances and fail to detect a material misstatement. Nonsampling risk includes the possibility of selecting audit procedures that are not appropriate to achieve a specific objective. For example, confirming recorded receivables cannot reveal unrecorded receivables. Nonsampling risk can be reduced to a negligible level through adequate planning and supervision.

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