The Independent Auditor Adds Credibility to the Client's Financial Report

question 3

Multiple Choice

The independent auditor adds credibility to the client's financial report by:

• A)testifying under oath about client financial information.
• B)attaching an auditor's opinion to the client's financial report.
• C)maintaining a clear-cut distinction between management's representations and the auditor's representations.
• D)stating in the auditor's communication of internal-control-related matters that the audit was made in accordance with Australian auditing standards.

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Definitions:

Discount Period

The time interval between when a bill of exchange is issued and its payment date, during which the bill is sold at a discount from face value.

2/10, Net 30

A common credit term indicating that a buyer can take a 2% discount on the invoice price if payment is made within 10 days, otherwise, the full invoice amount is due in 30 days.

Accruals

Adjustments in accounting for income that has been generated but not yet documented, and for costs that have been accrued but not yet documented.

Working Capital Needs

The funds required to finance the day-to-day operations of a business, including managing its short-term assets and liabilities.