In general, accounting estimates with a high degree of estimation _______.
A)uncertainty pose a greater risk of material misstatement
B)uncertainty pose a smaller risk of material misstatement
C)uncertainty pose no risk of material misstatement
D)serve to lower inherent risk

Question

Quizplus · Accepted Answer

Accounting estimates with a high degree of estimation uncertainty pose a greater risk of material misstatement because there is a higher likelihood that the estimate could be wrong or manipulated, leading to material errors in financial statements. This increases the audit risk for auditors, who must carefully assess the reasonableness and accuracy of these estimates.

In General, Accounting Estimates with a High Degree of Estimation