If Auditors Believe the Client Is Under Pressure to Report

question 10

Multiple Choice

If auditors believe the client is under pressure to report strong results, which of the following risks exist with regard to the current year's income? (choose two options)

• A)Inclusion of revenues earned after year-end
• B)Exclusion of expenses incurred before year-end
• C)Exclusion of revenues earned after year-end
• D)Inclusion of expenses incurred before year-end

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Definitions:

Salvage Value

The conjectured remaining value of an asset at the close of its functional lifetime.

Discount Rate

This refers to the interest rate employed in DCF calculations to figure out the present value of upcoming cash flows.

Net Present Value

A financial measure that determines the net present value by subtracting the total outgoing cash flows from the incoming cash flows over a certain time period.

Telecommunications Equipment

Hardware used in the transmission, reception, and processing of data and communication signals.