If Two Different Accountants Were to Estimate the Percentage of Customers

question 64

Multiple Choice

If two different accountants were to estimate the percentage of customers who will NOT pay their accounts (bad debts) , they could arrive at different estimates. These differing estimates would affect the financial statements. Such differences in assessing estimates are due to

• A) Fraudulent financial reporting
• B) Errors in accounts and ledgers
• C) Disagreements in judgment
• D) Lack of internal controls

---

Definitions:

Coupon Bond

A type of bond that pays the holder a fixed interest rate (coupon) over the bond's lifespan and repays the principal at maturity.

Yield To Maturity

The expected total yield from a bond assuming it is retained until the end of its term, accounting for all interest earnings and the return of the initial investment.

Market Yield

The current annual income return of an investment divided by the present market price.

Zero-Coupon Bonds

Bonds that do not pay periodic interest payments and are sold at a discount from their face value.