The Risk of Material Misstatement Related to the Existence of Long-Lived

question 107

True/False

The risk of material misstatement related to the existence of long-lived assets at Client A is considered low,while this risk at Client B is considered high.Sufficiency of evidence for testing the existence of equipment would be higher for client B.

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Definitions:

Net Income

The profit a company has after deducting all its expenses from its total revenue.

Unit Costs

The cost incurred to produce, purchase, or supply one unit of a product or service, calculated by dividing total costs by the number of units produced or purchased.

Inventory Items

Goods or materials that a business holds for the purpose of sale or production.

Retail Inventory Method

An accounting method used by retailers to estimate inventory cost by using a consistent markup and grouping similar items.