Question

Financial statements include _______.

1) a variety of items that cannot be measured precisely and must be estimated by client management
2) a variety of items that can be measured precisely and must be estimated by client management
3) a variety of items that cannot be measured precisely and must be estimated by the internal auditors
4) a variety of items that can be measured precisely and should not be estimated by client management

Answer 1

Financial statements include a variety of items that cannot be measured precisely and must be estimated by client management.

Step-by-step explanation:

Financial statements include a variety of items that cannot be measured precisely and must be estimated by client management. This is the first option provided in the question. Client management is responsible for making assumptions and estimates about uncertain events that could impact the financial statements. For example, client management may need to estimate the value of potential bad debts or the useful life of assets. These estimates are subject to judgment and may vary from one company to another.

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