There Are Numerous Factors That Contribute to the Risk of Misstatement

question 6

Essay

There are numerous factors that contribute to the risk of misstatement in the assertions for inventoriand cost of sales. List four of these factors.

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Definitions:

Operating Activity

Transactions and events related to the principal revenue-generating activities of an entity.

Investing Activity

Financial actions related to the purchase and sale of long-term assets and investments not included in cash equivalents.

Financial Activity

Transactions or events that affect the equity or debt of a company, including investments, financing, and distributing dividends.

Noncash Financing

Noncash financing activities are financial transactions that do not involve the physical flow of cash, such as issuing stock to purchase an asset or converting debt to equity.