The Report of a CPA on a Review of the Financial

question 42

Multiple Choice

The report of a CPA on a review of the financial statements of a nonpublic entity should not include a statement that

• A) All information included in the financial statements is the representation of the entity's management.
• B) The review was performed in accordance with generally accepted auditing standards.
• C) The CPA is not aware of any material modifications that should be made to the financial statements in order for them to be in conformity with generally accepted accounting principles.
• D) A review consists principally of inquiries of company personnel and analytical procedures applied to financial data.

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Definitions:

Net Present Value

A method of evaluating investment opportunities that calculates the difference between the present value of cash inflows and outflows over a period of time.

Capital Expenditure

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.

Net Income

The total profit of a company after all expenses, taxes, and costs have been subtracted from total revenue.

Salvage Value

The projected value of an asset for sale at the conclusion of its operational lifespan.