Question

Help Save & Exit Su Check my wc Required information Errors vs. Fraud in Property. Plant, and Equipment 1 of 2 Read the overview below and complete the activities that follow Misstatements can be of two types. The first type, an error, is deemed to be unintentional. The second type, fraud, is deemed to be an intentional act. Book Print CONCEPT REVIEW Auditors have the responsibility to plan and perform an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. Misstatement is classified as either unintentional (error) or intentional (fraud). There are specific examples of these within the audits of property, plant, and equipment erences Read the potential misstatements for Property, Plant, and Equipment and indicate whether each is an error or fraud by dragging and dropping it under the appropriate heading. Again recorded on an exchange of non-monetary assets that lacks commercial Score answer > < Prev 1 2 of 4 e OHRO here to search a

Answer 1

Ans.

1.A gain recorded on an exchange of nonmonetary assets that lacks commercial substance :- Error (It is the improper recoring of unusual transaction)

2.Purchases of equipment are erroneously reported in a maintenance and expense account :- Error (This is not done with any wrong intention )

3.Expenditures for repairs and maintenance intentionally recorded as property, plant, and equipment to overstate income :- Fraud (This is an intential act which is done to overstate the income)

4.An asset that has been replaced is discarded due to lack of value, with no entry to the general ledger :- Error (This is the case where entry is not passed for retirement of PPE)

Option 1,2 and 4 are the transactions which are not done intentionally and hence considered as Error while the Option 3 transaction is done with the intention to overstate income and considered as Fraud.