In which of the following situations were the financial statements not misstated?
A) Assets were taken, but the asset misappropriation was discovered and appropriately disclosed in the financial statements.
B) Assets were taken, and the theft was covered by misstating the related assets.
C) Assets were taken, and the theft was covered by understating revenues.
D) Assets were taken, and the theft was covered by overstating expenses.

Question

Quizplus · Accepted Answer

In situation A, the financial statements were not misstated because the misappropriation of assets was appropriately disclosed. However, in situations B, C, and D, the financial statements were misstated by covering up the theft through over- or understating the related accounts.

In Which of the Following Situations Were the Financial Statements