In an Unqualified Audit Report on the Financial Statements of a Public

question 89

Multiple Choice

In an unqualified audit report on the financial statements of a public company, what does the first statement of the opinion paragraph state?

• A)An audit was conducted, which financial statements were audited, and the dates of the financial statements.
• B)PCAOB audit standards were followed since it is a public company.
• C)The audit firm believes that its audit provides a reasonable basis for its opinion.
• D)Management is responsible for the fair presentation of the financial statements.

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Definitions:

Default Probability

The likelihood that a debtor will fail to make required payments on their debt.

Monthly Interest Rate

The interest rate that is applied on a monthly basis to the principal of a loan or mortgage to calculate the monthly interest payment.

Net Present Value

A valuation method that calculates the present value of an investment's expected cash flows, minus the initial investment cost.

Monthly Interest Rate

The percentage of interest that is charged or earned on a loan or investment over a month's time period.