ENTITY THEORY Definition

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ENTITY THEORY is where a legal entity is regarded as having a separate existence from the owners. The financial statements are prepared from the perspective of the entity, not its owners. See PROPRIETARY THEORY.

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ATTESTATION RISK is the risk the CPA may unknowingly fail to modify the report
on management’s assertion. It is composed of inherent risk, control risk, and detection risk.

WASTAGE see SCRAP.

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