Which of the Following Is NOT a Situation in Which

question 3

Multiple Choice

Which of the following is NOT a situation in which the auditor wants to draw users' attention to a material matter that is already presented and/or disclosed in the client's financial statements?

• A)A major disaster that may not have a significant impact on the company's financial situation
• B)Uncertainties relating to the future outcome of litigation
• C)Significant subsequent events
• D)Material transactions with related parties

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Definitions:

Net Operating Income

A company's revenue minus its operating expenses, not including taxes and interest, showing the profitability from regular business operations.

Average Operating Assets

The average amount of assets used during a period to generate operating income, useful in evaluating asset efficiency.

ROI

Return on Investment, a measure used to evaluate the efficiency or profitability of an investment, calculated as the net profit divided by the cost of the investment.

Residual Income

Residual income is the income that exceeds the minimum rate of return or cost of capital, often used in performance measurement and executive compensation.