Question

Specific misstatement in one of a client's 2,000 accounts receivable is referred to as a(n):

A. Extrapolation difference.
B. Known misstatement.
C. Likely misstatement.
D. Projected misstatement.

Answer 1

A specific misstatement in one of a client's 2,000 accounts receivable is referred to as a known misstatement.

Step-by-step explanation:

In accounting, a specific misstatement in one of a client's 2,000 accounts receivable is referred to as a known misstatement.

This term is used to identify a misstatement that has already been identified and documented during the auditing process. It is considered a specific error that was discovered, rather than a general estimate or projection of potential errors.

For example, if an auditor finds that one account receivable has been recorded as a higher amount than it should be, that specific misstatement would be classified as a known misstatement.