Management estimates the company's allowance for doubtful accounts as $200,000, and the auditors develop an estimate that suggests that the amount should be between $230,000 and $250,000. The likely misstatement in this situation is:
A) $0.
B) $30,000.
C) $40,000.
D) $50,000.

Question

Quizplus · Accepted Answer

The likely misstatement is the difference between the auditor's lower estimate ($230,000) and management's estimate ($200,000), which is $30,000.

Management Estimates the Company's Allowance for Doubtful Accounts as $200,000