What does the schedule of unadjusted errors summarize?

• A. Errors and adjustments recommended but individually not material.
• B. Only material errors.
• C. Adjusting entries prepared.
• D. All misstatements identified included.

Answer: (A)

In an audit, the schedule of unadjusted errors captures misstatements that the auditors identified but have not been corrected in the financial statements. It lists each error and the auditor’s proposed adjustment, with the key idea that these are not material on their own. The purpose is to assess whether, when combined, these immaterial misstatements could become material, and to show management what adjustments are suggested.

That’s why this option fits best: it reflects misstatements identified and the adjustments recommended, but which are not material individually. The other statements don’t fit because the schedule isn’t limited to material errors, it isn’t just the adjusting entries themselves, and it doesn’t include all misstatements identified if some have been adjusted or are outside the unadjusted scope.