Reasonable Assurance Allows for

question 104

Multiple Choice

Reasonable assurance allows for

• A) low likelihood that material misstatements will not be prevented or detected by internal controls.
• B) no likelihood that material misstatements will not be prevented or detected by internal control.
• C) moderate likelihood that material misstatements will not be prevented or detected by internal control.
• D) high likelihood that material misstatements will not be prevented or detected by internal control.

---

Definitions:

Bargain Purchase

A situation where an entity acquires another entity's assets for less than their fair market value, often leading to a gain in the acquirer's financial statement.

Investment Account

An account held at a financial institution that is used for the purpose of investing in securities such as stocks, bonds, and mutual funds.

Liabilities

Liabilities are the economic debts or responsibilities that a business has to other entities, which are to be fulfilled over time by transferring economic resources.