Choice "C" is correct. Erroneously concluding that an account balance is materially misstated is an example of incorrect rejection.
Choice "a" is incorrect. The assessment of control risk relates to tests of controls, not to tests of details (substantive testing).
Choice "d" is incorrect. The assessment of control risk relates to tests of controls, not to tests of details (substantive testing).
Choice "b" is incorrect. If the auditor had concluded that the account was fairly presented when, in fact, it was not, it would be an example of incorrect acceptance.
