Author Question: The dollar amount of some misstatements cannot be accurately measured. For example, if the client ... (Read 59 times)

frosh101 · **on:** Aug 21, 2022

Question 1

Misstatements must be compared with some measurement base before a decision can be made about materiality. A commonly accepted measurement base includes
◦ net income.
◦ total assets.
◦ working capital.
◦ All of these.

Question 2

The dollar amount of some misstatements cannot be accurately measured. For example, if the client were unwilling to disclose an existing lawsuit, the auditor must estimate the likely effect on
◦ net income.
◦ users of the financial statements.
◦ the auditor's exposure to lawsuits.
◦ management's future decisions.

mllong · **Reply #1 on:** Aug 21, 2022

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