What Is the Best Reason That Standards Prohibit Accepting an Engagement

question 123

Multiple Choice

What is the best reason that standards prohibit accepting an engagement on a projection for general use?

• A) The CPA's procedures would violate SSARS.
• B) Reports on projections are not well understood by the general public.
• C) Underlying hypothetical assumptions are difficult to interpret without obtaining additional information.
• D) The CPA is not qualified to report on the use of GAAP in the projected financial statement.

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Definitions:

Initial Cash Flow

The initial movement of money for an investment or project, often an outlay, which is considered when evaluating the potential financial returns.

Liabilities

Liabilities are financial obligations a company owes to external parties, such as loans, accounts payable, and mortgages.

Accrual

An accounting method that records revenues and expenses when they are incurred, regardless of when cash is exchanged.

Accrual

The accounting method that records revenues and expenses when they are incurred, regardless of when cash transactions occur.