Under Auditing Standards, which of the following would be classified as an error? Multiple Choice Misappropriation of assets for the benefit of management. Preparation of records by employees to cover a fraudulent scheme. Misinterpretation by management of facts that existed when the financial statements were prepared. Intentional omission of the recording of a transaction to benefit a third party.

The correct choice is C)

A misinterpretation by management of facts that existed when the financial statements were being prepared can be classified as an error.

Explanation:

An accounting error is a non-fraudulent discrepancy in financial documentation. The term is used in financial reporting. Types of accounting errors include:

Error of omission - a transaction that is not recorded. ... One example of an error of commission is subtracting a figure that should have been added.Error of commission - a transaction that is calculated incorrectly. One example of an error of commission is subtracting a figure that should have been added.Error of principle - a transaction that is not in accordance with generally accepted accounting principles ( GAAP). One example of an accounting error of principle is an expenditure that is placed in an inappropriate category.

If a company discovers that an accounting error significantly affected a previous report, it usually issues a restatement of the original release.

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