The Use of the Term "Reasonable Assurance" Is Intended to Indicate

question 46

Multiple Choice

The use of the term "reasonable assurance" is intended to indicate that an audit cannot be expected to

• A)completely eliminate the possibility that a material error or fraud exists.
• B)consider or search for minor errors.
• C)be compliant with the generally accepted accounting principles for every account.
• D)provide assurance of no material errors or irregularities to investors who are using the financial statements for investment decisions.

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Definitions:

Par Value

The nominal or face value of a bond, share of stock, or coupon as indicated on a bond or stock certificate.

Fair Value

The cost incurred or received during the sale of an asset or transfer of a liability in a systematic transaction among market actors on the valuation date.

Undervalued

An economic condition where the market price of an asset falls short of its intrinsic or real value as evaluated by investors.

Overvalued

A descriptor for an asset or stock whose price is believed to be higher than its intrinsic value.