An Examination of a Financial Forecast Is a Professional Service

question 20

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 the preparation of a financial forecast and the support underlying management's assumptions.

Learn the principles of comprehensive income reporting and its components according to GAAP.

Understand how changes in accounting principles and estimates are reported and their impact on financial statements.

Recognize the importance of matching expenses with revenues in the correct accounting period.

Understand the basics of the accounting equation and its implications for financial statements.

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Definitions:

General Ledger

A comprehensive set of accounts that records all financial transactions of a business, showing assets, liabilities, equity, revenue, and expenses.

Accounts Payable

Liability accounts on a company's balance sheet representing amounts owed to creditors for goods and services received but not yet paid for.

Prepaid Insurance

Payments made for insurance coverage before the coverage period begins, recorded as an asset on the balance sheet.

Corrected Trial Balance

A list of all the account titles and balances of a company after adjustments and corrections have been made.