Which of the following is least likely to render material a quantitatively small misstatement material?
A)Affects the registrant's compliance with regulatory requirements.
B)Masks a change in earnings or other trends.
C)Arises from an item not capable of precise measurement.
D)The transaction involves a related party.

Question

Quizplus · Accepted Answer

A misstatement that arises from an item not capable of precise measurement is least likely to render material a quantitatively small misstatement. This is because such misstatements are typically difficult to estimate, and therefore, the impact on the financial statements may not be significant. On the other hand, misstatements that affect the registrant's compliance with regulatory requirements or mask a change in earnings or other trends are more likely to be material, even if they are relatively small in amount. Similarly, transactions involving related parties can also be more likely to be material, as they may indicate the possibility of self-dealing or other conflicts of interest.

Which of the Following Is Least Likely to Render Material