Tantramar Geothermal Has Hired a New Accountant

question 28

Multiple Choice

Tantramar Geothermal has hired a new accountant. When she reviewed the financial statements for the previous year, she found a significant error which would mean that the statements were wrong. She should NOT

• A) create a new account called "suspense" and use it to correct the error.
• B) notify the Management of the company immediately of the problem.
• C) research the journal entries to try and find the error.
• D) review all of the transactions for the past year for reasonableness.

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Definitions:

Incremental Analysis

A decision-making technique used to determine the financial impact of different choices by comparing their costs and benefits.

Variable Cost

Expenses that fluctuate with production volume, such as direct materials and direct labor costs.

Fixed Expenses

Fixed expenses are recurring costs that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.

Net Present Value

Net present value is a financial calculation that determines the worth of a project or investment by discounting its future cash flows to the present value using a specific discount rate, to assess its profitability.