What Does the Review Service Provided by the CPA Firm

question 96

Multiple Choice

What does the review service provided by the CPA firm require?

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

---

Definitions:

Contribution Format

A type of income statement where costs are separated into variable and fixed categories, highlighting the contribution margin.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, determined by the proportion of fixed costs in a company's cost structure.

Sales Increase

The rise in the volume or amount of sales over a specific period, reflecting business growth.

Net Operating Income

The profit generated from a company's core business operations after deducting all operating expenses except for interest and taxes.