When Comparing Misstatements with a Measurement Base, the Auditor Must

question 122

Multiple Choice

When comparing misstatements with a measurement base, the auditor must consider the pervasiveness of the misstatement. Of the following examples, the most pervasive misstatement is a(n)

• A) understatement of inventory.
• B) understatement of retained earnings caused by a miscalculation of dividends payable.
• C) misclassification of notes payable as a long-term liability when it should be current.
• D) misclassification of salary expense as a selling expense.

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Definitions:

Personality Assessment

A method or instrument used to evaluate and measure an individual's personality traits and characteristics.

Projective

A type of psychological test in which subjects' responses to ambiguous stimuli are analyzed to uncover unconscious desires, feelings, or aspects of their personality.

Inventory

A detailed list or stock of goods, materials, or other items held by an organization or individual.

Albert Bandura

A psychologist known for his work on social learning theory, emphasizing the role of observational learning, self-efficacy, and modeling in behavior.