Which Assertion Relates Mainly to the Possible Understatement of Financial

question 9

Multiple Choice

Which assertion relates mainly to the possible understatement of financial statement balances through the omission of items that exist or of the effects of transactions that occurred?

• A)Existence.
• B)Rights and obligations.
• C)Completeness.
• D)Accuracy, valuation and allocation.

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Definitions:

Unlevered Cost

The cost of an investment that does not include the impact of borrowing; essentially the expense borne without considering the effect of leverage.

Targeted Cost

The desired or estimated cost of a product or project, set in order to achieve competitiveness and profitability objectives.

Debt-Equity Ratio

An indicator showing the relative mix of equity and debt financing employed by a company for its assets.

Pre-Tax Cost

The pre-tax cost of debt is the interest rate a company pays on its borrowings before taking into account the tax deductions that reduce the effective interest cost.