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 making assumptions and estimates in the preparation of prospective financial statements. These assumptions are based on future events and uncertain circumstances, which require management to use their judgment and knowledge of the business. It is their responsibility to ensure that the assumptions are reasonable and supported by appropriate data and analysis.

The Party Responsible for Assumptions Identified in the Preparation of Prospective