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Sir can you please explain this statement to me,
If a business has a bank loan of $50,000 and a $55,000 balance on bank deposit account, it will be a material misstatement if these two amounts are displayed on the statement of financial position as ‘cash at bank $5,000’. In other words, incorrect presentation may amount to material misstatement even if there is no monetary error.
A company is required to show assets and liabilities separately and not to just show the net figure.
Even though the net figure is only small, the two separate balances (deposit and loan) are both large.
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