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.Differences 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

A.An inaccuracy in processing data.

The type of known misstatement option that does not fit is 'Differences between management and the auditor's judgment regarding estimates' as it represents a disagreement rather than an actual misstatement.

Step-by-step explanation:

The question is asking to identify which option is not a type of known misstatement. The options listed are phenomena that can occur in the accounting or auditing process, except for the information regarding errors of distortion like misattribution, suggestibility, and bias, which are related to cognitive psychology. In auditing, a misstatement typically refers to an error or inaccuracy in the financial statements, such as:

• An inaccuracy in processing data.
• The misapplication of accounting principles.
• A difference between the classification of a reported financial statement element and the classification according to generally accepted accounting principles.

Option C, 'Differences between management and the auditor's judgment regarding estimates,' does not constitute a misstatement in and of itself; it's a disagreement that might lead to further discussion or analysis. Thus, it is the correct answer to the question, as it is the one that is not a type of known misstatement.