Which of the following will generally be considered a significant risk?
A) a sale to a customer
B) the determination of the amount of bad debt expense
C) the purchase of inventory
D) obtaining a loan from the bank

Question

Quizplus · Accepted Answer

The determination of the amount of bad debt expense is considered a significant risk because it involves judgment and estimates that could be materially misstated. Estimating bad debts requires management to make assumptions about future events and conditions, which are inherently uncertain and could significantly impact the financial statements if incorrect.

Which of the Following Will Generally Be Considered a Significant