Which One of the Following Is Not a Purpose of the Management

question 151

Multiple Choice

Which one of the following is not a purpose of the management representation letter?

• A)It clearly documents the audit procedures that were performed by the auditors.
• B)It further acknowledges management's responsibility for the financial statements.
• C)It confirms oral responses obtained by the auditor earlier in the audit and the continuing appropriateness of those responses.
• D)It reduces the possibility of misunderstanding concerning the matters that are the subject of the representations.

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Definitions:

Cost Of Capital

The necessary yield a business needs to achieve on investment endeavors to preserve its market capitalization and secure capital.

Discount Rate

The interest rate used to determine the present value of future cash flows or to evaluate the attractiveness of an investment.

Opportunity Cost

The cost of an alternative that must be forgone in order to pursue a certain action, essentially the benefits you could have received by taking another course of action.

EVA

Economic Value Added, a measure of a company's financial performance based on the residual wealth calculated by deducting its cost of capital from its operating profit.