Most audit firms use a schedule to accumulate the known and projected misstatements and the carryover effects of prior-year uncorrected misstatements. Which of the following statements regarding this process is false?
A) Adjustments made to correct the financial statements are referred to as booked.
B) Possible adjustments to the financial statements that are left uncorrected are referred to as waived.
C) Tax effects are not shown on schedules of correcting errors.
D) The nature of the misstatement, as well as the quantitative amount, is considered in the judgment of materiality.

Question

Quizplus · Accepted Answer

Tax effects are usually included in schedules of correcting errors, so statement C is false. The other statements are true: adjustments made are referred to as booked, possible adjustments left uncorrected are referred to as waived, and the nature and quantitative amount of misstatements are both considered in the judgment of materiality.

Most Audit Firms Use a Schedule to Accumulate the Known