Misstatements involving the existence objective for sales lead to overstatements of assets and income.

Question

Quizplus · Accepted Answer

Misstating the objective for sales leads to overstatements of assets and income because sales objectives are often tied to revenue and profit goals, so misstating these objectives can result in overestimating the potential revenue and profit from sales. This can lead to an overstatement of assets such as accounts receivable and inventory, and an overstatement of income due to premature recognition of revenue.

Misstatements Involving the Existence Objective for Sales Lead to Overstatements