Inadequate controls and misstatements discovered through tests of controls and substantive tests of transactions are an indication of the likelihood of misstatements in:
A) the balance sheet.
B) the income statement.
C) the cash flow statement.
D) both the income statement and the balance sheet.

Question

Quizplus · Accepted Answer

Inadequate controls and misstatements discovered through tests of controls and substantive tests of transactions can affect both the income statement and the balance sheet as it can affect the accuracy of financial statements as a whole. While the cash flow statement is impacted by these misstatements, it is not a primary indicator of the likelihood of misstatements.

Inadequate Controls and Misstatements Discovered Through Tests of Controls and Substantive