Under Auditing Standards, Which of the Following Would Be Classified

question 39

Multiple Choice

Under Auditing Standards, which of the following would be classified as an error?

• A)Misappropriation of assets for the benefit of management.
• B)Misinterpretation by management of facts that existed when the financial statements were prepared.
• C)Preparation of records by employees to cover a fraudulent scheme.
• D)Intentional omission of the recording of a transaction to benefit a third party.

---

Definitions:

Interest Rate

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets.

Loanable Funds

The money available for borrowing in the financial markets, corresponding to savings that are lent out for investment.

Liquidity Preference Theory

A theory suggesting that people prefer to hold their wealth in liquid form for ease of spending but are willing to accept less liquidity for a higher return.

Interest Rate

The percentage of a sum of money charged for its use, often expressed as an annual percentage rate.