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From the list below, select the procedures that an auditor would use to test for contingent liabilities.
a. Inquire of SEC officials regarding reported violations by the entity that create claims.
b. Read the entity's contracts, loan agreements, leases, and other documents.
c. Read the entity's minutes of meetings of shareholders, directors, and committees.
d. Request a representation letter from all the entity's employees.
e. Read the legal briefs of all suits filed against the entity's competitors.
f. Request the entity's management to prepare a letter of inquiry to the entity's attorney regarding pending litigation against the entity.
Profitable
A financial state where earnings exceed expenses, resulting in a positive net income.
Discount Rate
The discount rate applied in DCF analysis to calculate the current value of future cash flows.
Net Present Value
The discrepancy between the current worth of incoming cash and the current worth of outgoing cash over a certain timeframe, utilized in the process of capital budgeting to evaluate an investment's profitability.
Required Rate Of Return
The minimum expected return an investor demands for an investment, determining the value of potential investments.
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