It Is Management's Responsibility to Select the Accounting Policies That

question 4

Multiple Choice

It is management's responsibility to select the accounting policies that are used in the preparation of the financial statements.What is the auditor's responsibility with respect to these accounting policies?

• A)Approve the accounting policies that are used,so that an opinion can be stated on the fairness of the financial statements.
• B)Evaluate the appropriateness of the accounting policies that are used and of the associated estimates made.
• C)Tell management which accounting policies should be selected so that accurate estimates can be made for year-end adjustments.
• D)Recalculate the estimates that are used for the accounting policies (such as bad debt allowance and warranty expenses).

---

Definitions:

Fund Benefits

Refers to the advantages or financial aid provided by an investment fund to its investors.

Qualified Plan

A retirement plan that meets the requirements of the Internal Revenue Code and ERISA, offering tax benefits to both employers and employees.

Tax Deductions

Expenses that can be subtracted from gross income to reduce the total amount of income tax owed.

Retirement Benefits

Financial support or services provided to employees after they exit the workforce, including pensions, health insurance, and other perks.