Question

An accounting estimate is _______. A. an exact monetary amount when a precise means of measurement...

An accounting estimate is _______.

A. an exact monetary amount when a precise means of measurement is available

B. an approximation of a monetary amount when a precise means of measurement is not available

C. prohibited by GAAP and should be questioned by the auditor

D. a figure that should be left to the external auditor to determine at the end of the year

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Answer #1

Answer : B. an approximation of a monetary amount when a precise means of measurement is not available

As

Accounting estimate is required only when the precise information is not available but still we are to record the finacital event for the fair presentation of accoutns and finacial statements as in cases of allowances for uncollectible and depreciation

so an approximation of amount is decided after doing a lot brain storming

hence our answer is

B. an approximation of a monetary amount when a precise means of measurement is not available

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