Which of the Following Procedures Should an Accountant Perform During

question 2

Multiple Choice

Which of the following procedures should an accountant perform during an engagement to review the financial statements of a private company?

• A)Communicate internal control system weaknesses that were discovered during the assessment of control risk.
• B)Obtain a letter of representation signed by top-level management.
• C)Send bank confirmations to the company's financial institutions.
• D)Examine cash disbursements in the subsequent period for evidence of unrecorded liabilities.

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Definitions:

Markup Percentage

The percentage added to the cost price of goods to cover overhead and profit in the selling price.

Total Cost Method

An accounting approach that aggregates all costs associated with the production of goods or services to determine their overall expense.

Variable Cost

A cost that changes in proportion to the level of production or sales volume.

Differential Analysis

This analysis involves comparing the costs and benefits of alternative business decisions, focusing on the differences in outcomes under each option.