In General, Accounting Estimates with a High Degree of Estimation

question 17

Multiple Choice

In general, accounting estimates with a high degree of estimation _______.

• A)uncertainty pose a greater risk of material misstatement
• B)uncertainty pose a smaller risk of material misstatement
• C)uncertainty pose no risk of material misstatement
• D)serve to lower inherent risk

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Definitions:

Long-term Borrowings

Loans and financial obligations lasting more than one year, used by businesses to finance major investments or acquisitions.

Financing Activities

Transactions and events that affect the long-term liabilities and equity of a company, including issuing debt and equity.

Note Payable

A written promise to pay a specific sum of money to a bearer or a specified person at a future date or on demand.

Cash Dividends

Profits paid out to shareholders by a corporation based on the number of shares they own.