EXAMINATION, in an audit, is evaluating the preparation of prospective statements, support underlying assumptions, and presentation. The accountant reports whether, in his
or her opinion, the statements conform to AICPA guidelines and assumptions provide a reasonable basis for the responsible party's forecast. The accountant should be independent, proficient, plan the engagement, supervise assistants, and obtain sufficient evidence to provide a reasonable basis for the report.
PRE-TAX INCOME/PROFIT see PROFIT BEFORE TAXES.
CAPITAL INTENSIVE is used to describe industries or sectors of the economy that require large investments in capital assets to produce their goods, such as the automobile industry. These firms require large profit margins and/or low costs of borrowing to survive.
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