Which of the following statements best describes a misstatement?
A)a misstatement is either an error (an unintentional mistake)or fraud (an intentional mistake)in the audit report
B)some management misstatements are material and some management misstatements are too small to be material
C)when a statement is material,an outsider would change his decision regarding the company if he knew about the misstatement
D)some misstatements are neither material nor immaterial

Question

Quizplus · Accepted Answer

A misstatement is an error or omission in the financial statements that can be either material or immaterial. Material misstatements are those that would affect the decision-making process of a reasonable person relying on the financial statements. In other words, if a misstatement is material, an outsider would change his decision regarding the company if he knew about the misstatement.

Which of the Following Statements Best Describes a Misstatement