When Evaluating Whether Accounting Estimates Made by Management Are Reasonable,the

question 132

Multiple Choice

When evaluating whether accounting estimates made by management are reasonable,the audit team would be most interested in which of the following?

• A) Key factors that are consistent with prior periods.
• B) Assumptions that are similar to industry guidelines.
• C) Measurements that are objective and not susceptible to bias.
• D) Evidence of a conservative systematic bias.

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Definitions:

Basketball

A team sport where players aim to score points by shooting a ball through a hoop at a certain height.

Inductive Strength

A property of some logical arguments such that it is improbable (but not impossible) for the premises to be true and the conclusion to be false.

Deductive Validity

The logical feature of an argument whereby if the premises are true, the conclusion must also be true.