The Client May Use a Variety of Methods to Understate

question 85

Multiple Choice

The client may use a variety of methods to understate liabilities,interest expense and long-term debt.These include

• A)Recording operating leases as capital leases to avoid putting the liability on the balance sheet.
• B)Failing to disclose long-term agreements.
• C)Failing to disclose special debt arrangements,such as transactions with special purpose entities in an attempt to keep debt arrangements off the books.
• D)Failing to disclose related-party transactions.Debt associated with related-parties may carry a higher risk than debt associated with non-related parties.
• E)both A and B
• F)both B and E
• G)both C and D

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Definitions:

Population Proportion

The ratio of members in a specified subset to the total members of a population, often expressed as a percentage.

Sample Proportion

The fraction of the sample that represents a particular outcome or characteristic.

Confidence Interval

A range of values derived from sample statistics that is likely to contain the value of an unknown population parameter.

Sample Variance

A measure of the dispersion or spread of data points in a sample, calculated by taking the average of the squared differences from the mean.