Which of the Following Is Not a Reason Why the Auditor

question 75

Multiple Choice

Which of the following is not a reason why the auditor needs to take special care to review significant estimates in the financial statements?

• A) Organizations may try to use the estimates to "smooth" earnings.
• B) Organizations may create hidden reserves in unusually good years that can be used in years when real profits do not meet expectations.
• C) Companies may underestimate liabilities or impairment of asset values to achieve reported earning goals in years when real profits to not meet expectations.
• D) Companies may try to overestimate liabilities in computing leverage ratios.

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Definitions:

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refers to the period of educational practices and institutions that were prevalent in the 1700s, characterized by the growth of private tutors, charity schools, and the beginning of formal schooling systems in various countries.

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