When Comparing Misstatements with a Measurement Base, the Auditor Must

question 122

Multiple Choice

When comparing misstatements with a measurement base, the auditor must consider the pervasiveness of the misstatement. Of the following examples, the most pervasive misstatement is a(n)

• A) understatement of inventory.
• B) understatement of retained earnings caused by a miscalculation of dividends payable.
• C) misclassification of notes payable as a long-term liability when it should be current.
• D) misclassification of salary expense as a selling expense.

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Definitions:

Implied

Something suggested or understood without being directly expressed.

Traveler's Check

A preprinted, fixed-amount check designed to allow the person signing it to make an unconditional payment to someone else as a result of having paid the issuer for this privilege.

Payable On Demand

A term indicating that a payment is to be made immediately or whenever requested by the entitled party.

Countersignature

An additional signature required on a document or check to verify or approve its legitimacy, often used for security or authorization purposes.