During the Audit of XYZ Ltd the Auditor Found a Misstatement

question 27

Multiple Choice

During the audit of XYZ Ltd the auditor found a misstatement that equated to 7% of the base amount.Based on historical practice, this amount is deemed to be:

• A)a matter of professional judgement whether it is considered material.
• B)material.
• C)not material.
• D)none of the above.

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Definitions:

Allowance for Sales Discounts

An account used in bookkeeping to estimate the reduction in revenue due to sales discounts that customers are expected to take advantage of.

Accounts Receivable

Debts owed by customers to a business for items or services that have been furnished but not compensated.

Sales Discounts

A reduction in the price of goods sold, offered by the seller to the buyer, often to encourage prompt payment.

Periodic Inventory System

A method of inventory valuation for financial reporting purposes where a physical count of all inventory is performed at specific intervals to determine the level of inventory and the cost of goods sold.