Question

Each of the following is a type of known misstatement except______________________.

• A. An inaccuracy in processing data
• B. The misapplication of accounting principles
• C. Difference between management and the auditor's judgment regarding estimates
• D. A difference between the classification of a reported financial statement element and the classification according to generally accepted accounting principles

Answer 1

The correct option is C Difference between management and the auditor's judgment regarding estimates

Misstatement refers to error in the financial statement and there can be different types of misstatement. An inaccuracy in processing data, misapplication of accounting principles and difference between the classification of a reported financial statement element and the classification according to generally accepted accounting principles are all the example of misstatement. But difference between management and the auditor's judgment regarding estimates is not covered under misstatement. It’s just a difference in view on future projection based on current evidence.