Which Method Focuses on the Materiality of Current Year Misstatements

question 155

Multiple Choice

Which method focuses on the materiality of current year misstatements and the reversing effect of prior-year misstatements on the income statement?

• A)Rollover method.
• B)Iron curtain method.
• C)Percentage approach.
• D)Judgmental method.

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Definitions:

Equity Theory

A theory in social psychology that explains how individuals perceive fairness in distribution of resources and treatment in social exchanges.

Inputs

Resources, materials, or information that are provided to a process or system in order to achieve desired outputs or outcomes.

Expectancy Theory

A motivation theory explaining that an individual's motivational force is a function of their expectation that certain behaviors will lead to desired outcomes.

Internal Attribution

The process of attributing the cause of one's own or others' behavior to internal, personal characteristics rather than to external factors.