An Examination of a Financial Forecast Is a Professional Service

question 66

Multiple Choice

An examination of a financial forecast is a professional service that involves:

• A)compiling or assembling a financial forecast that is based on management's assumptions.
• B)limiting the distribution of the accountant's report to management and the board of directors.
• C)assuming responsibility to update management on key events for one year after the report's date.
• D)evaluating whether the computations of prospective amounts are mathematically accurate and assumptions are internally consistent.

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Definitions:

WACC

The Weighted Average Cost of Capital measures a firm’s cost of capital, weighting each type of capital according to its proportion.

Project Evaluation

Project evaluation involves assessing a project's viability and effectiveness in achieving its objectives, often considering factors like cost, time, and potential returns.

Single Source

The practice of obtaining a particular product, service, or component from a single supplier, making the supplier the exclusive provider.

Average Cost

The total cost of goods available for sale divided by the total units available for sale, determining the cost of inventory.