Estimation uncertainty is defined as _______.
A)the susceptibility of an accounting estimate and related disclosures to be accurate
B)the susceptibility of an accounting estimate and related disclosures due to an inherent lack of precision in its measurement
C)the uncertainty surrounding the ultimate cost of the audit
D)the uncertainty surrounding which staff members to assign to a particular audit

Question

Quizplus · Accepted Answer

Estimation uncertainty refers to the inherent lack of precision in measuring accounting estimates and the related disclosures. It is the uncertainty relating to the amount or range of measurement uncertainty surrounding accounting estimates. It arises due to the complexity of the underlying transactions or events, the limited availability of information, and the use of subjective judgment in estimating the amount involved. The other options (A, C, D) are not accurate definitions of estimation uncertainty.

Estimation Uncertainty Is Defined as _______