Which two examples represent financial statement errors?

The correct answers are A and C . A financial statement error is an unintentional misstatement in the amount, classification, presentation, or disclosure of financial statement information. PCAOB standards explain that misstatements can arise from either error or fraud , and errors are unintentional. A miscalculated payroll tax liability is a classic accounting error because it produces an incorrect liability amount without intent to deceive. Likewise, unintentionally recording unearned customer prepayments as revenue is an error in revenue recognition and financial statement classification.

Option B is not an error; it is fraud or misappropriation of assets because it involves deliberate overpayment and a kickback. PCAOB fraud guidance distinguishes intentional misconduct from accidental mistakes. Option D is not necessarily an error merely because an auditor disagrees with management’s estimate. Allowance for uncollectible accounts is an area of judgment, and disagreement alone does not prove a financial statement error exists. Therefore, the two choices that best represent unintentional financial statement errors are A and C .