Match the following terms to the appropriate definition (or partial deﬁnition). Each definition is used once."Deﬁnltlon (or Partial Deﬁnition)in A contractual obligation to carry out a transaction at specified terms in the future.ontingent Material commitments should be disclosed in the financial statements.liabilityeneral risk A possible liability, stemming from past events, that will be resolved as to existence andontingency. Iron curtain -mount by some future event.- pproach- Known 3. A possible loss, stemming from past events, that will be resolved as to existence andmisstatementsLikely - mount by some future event.misstatements' Loss . A n approach to making materiality judgments that quantifies the total likely misstateontingencyh. Rollover ment as of the current year-end based on the effects of reflecting all misstatements- pproachincluding projecting misstatements where appropriate) existing in the balance sheet at. the end of theurrent year, irrespective of whether the misstatements occurred in the current year or previous years.

1. Commitment : A contractual obligation to carry out a transaction at specified terms in the future. Material commitments should be disclosed in the financial statement.

2. Contingent liability: a possible liability stemming from past events, that would be resolved as to the existence and amount by some future event.

3. General risk contingency: An element of the business environment that involves some risk of a future loss. Examples include the risk of accident, strike, price ﬂuctuations, or natural catastrophe. General risk contingencies should not be disclosed in ﬁnancial statements.

4. Iron curtain approach: An approach to making materiality judgments that quantiﬁes the total likely misstatement as of the current year-end based on the effects of reﬂecting all misstatements (including projecting misstatements where appropriate) existing in the balance sheet at the end of the current year.

5. Known misstatements: Specific misstatements identified by the auditor during the course of the audit.

6. Likely misstatements: Misstatements identified by the auditor during the course of the audit that are due to either extrapolation from audit evidence or differences in accounting estimates.

7. Loss contingency: A possible loss, stemming from past events that will be resolved as to the existence and amount by some future event.

8. Rollover approach: An element of the business environment that involves some risk of a future loss.