When Does Inadequate Disclosure Occur

question 7

Multiple Choice

When does inadequate disclosure occur?

• A) When a company attempts to overstate assets to make their financial position look better
• B) When management makes statements that are wrong in its annual report or any other media
• C) When assets are not written down to their appropriate values because insufficient depreciation is recorded
• D) When a company understates its liabilities and overstates its revenues and net income

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Definitions:

Journal Entry

An official written record that represents a transaction in accounting, used to transfer information to the general ledger.

Cash Short and Over

An account that tracks discrepancies between the expected cash amount and the actual amount received or disbursed.

Control Environment

The set of standards, processes, and structures that provide the foundation for carrying out internal control across the organization, influencing the overall attitude, awareness, and actions concerning the internal control system and its importance to the entity.

Internal Control

Processes and procedures implemented by an organization to ensure the integrity of financial and accounting information, promote accountability, and prevent fraud.