At a Small Practice Where the Bulk of the Work

question 84

Multiple Choice

At a small practice where the bulk of the work is accounting,bookkeeping,and review engagements,what is an important procedure that should be followed by the PA to help ensure independence?

• A)Management should be trained in accounting principles so that they can adequately assess the PAs work.
• B)All transactions should be prepared and processed by client personnel.
• C)Transactions and journal entries should be discussed with and approved by the client.
• D)The accountant should avoid doing bookkeeping for review engagements,and restrict this to compilation engagements only.

---

Definitions:

Two-Tailed Test

A hypothesis testing approach that allows for the possibility of an effect in two directions, either higher or lower than the null hypothesis, and hence tests for the presence of any significant difference.

Test Statistic

A calculated value that is used in statistical tests to determine whether to reject the null hypothesis, based on sample data.

P-Value

The probability of getting the observed value of the test statistic, or one more extreme, assuming the null hypothesis is true.

Level Of Significance

The probability of rejecting the null hypothesis when it is true, typically set as a threshold like 0.05 or 0.01 before conducting a hypothesis test.