The party responsible for assumptions identified in the preparation of prospective financial statements is usually:
A)a third-party lending institution.
B)the entity's management.
C)the reporting accountant.
D)the entity's independent auditor.

Question

Quizplus · Accepted Answer

The entity's management is responsible for the assumptions made in the preparation of prospective financial statements as they have the best knowledge of the entity's operations, financial position, and future plans. Lending institutions, reporting accountants, and independent auditors may review the assumptions provided by management, but they are not responsible for making them.

The Party Responsible for Assumptions Identified in the Preparation of Prospective