The Most Common Misstatements That an Auditor Is Likely to See

question 69

Multiple Choice

The most common misstatements that an auditor is likely to see in the cash and investment process accounts involves

• A)misclassification of trading and available-for-sale securities
• B)misclassification of held-to-maturity investments
• C)overstatement of unrealized gains
• D)understatement of cash
• E)overstatement of cash
• F)both A and B
• G)both C and D
• H)Both A and E

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Definitions:

Underapplied Overhead

A situation where the actual manufacturing overhead costs are higher than the overhead costs allocated to products.

Credit Side

The right side of an accounting ledger where increases in liabilities, revenues, and equity accounts are recorded.

Short Term Profitability

The ability of a company to generate profit over a brief period, often evaluated on a quarterly or annual basis.

Marketing Costs

Expenses related to promoting and selling products or services, including advertising, product promotion, and sales force expenses.