The Review Service Provided by the CPA Firm Requires the CPA

question 62

Multiple Choice

The review service provided by the CPA firm requires the CPA to

• A)make inquiries concerning matters affecting the financial statements.
• B)confirm accounts receivable.
• C)test internal controls.
• D)provide reasonable assurance.

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Definitions:

Effective Interest Rate

The real rate of interest earned or paid on an investment, loan, or other financial product adjusted for compounding over a given period.

Present Value

The value today of a future cash amount or series of payments, based on a particular rate of return.

Fair Value

The value received from selling an asset or the expense of transferring a liability in a regulated transaction among market players on the date of evaluation.

Sale of Receivables without Recourse

A financial transaction where a business sells its accounts receivable to a third party without the obligation to repay if the third party fails to collect the receivables.