This is an exercise concerning financial reporting misstatements.

Required:

• Give an example of an error or fraud that would misstate financial statements to affect the accounts in the scenarios that follow, take one case at a time.
• (Note: Overstate means the account has a higher value than would be appropriate under GAAP, and understate means it has a lower value.)
• Be specific in your explanation and provide illustration of the accounts that would be affected.
• An example for the first one has been provided below. Students should provide their own new example for [1]

[1] Overstate an asset; understate another asset.

[2] Overstate an asset; overstate shareholder equity.

[3] Overstate an asset; overstate revenue.

[4] Overstate an asset; understate an expense.

[5] Overstate a liability; overstate an expense.

[6] Understate an asset; overstate an expense.

[7] Understate a liability; understate an expense.