An Auditor Has Been Asked to Report on the Balance

question 292

Multiple Choice

An auditor has been asked to report on the balance sheet of Kane Company but not on the other basic financial statements. The auditor will have access to all information underlying the basic financial statements. Under these circumstances, the auditor:

• A) May accept the engagement because such engagements merely involve limited reporting objectives.
• B) May accept the engagement but should disclaim an opinion because of an inability to apply the procedures considered necessary.
• C) Should refuse the engagement because there is a client-imposed scope limitation.
• D) Should refuse the engagement in accordance with generally accepted auditing standards.

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Definitions:

Supplies

Materials and items that are used in the day-to-day operations of a business but are not directly tied to the production of goods or services.

Variable Overhead Efficiency Variance

The difference between the expected (standard) cost of variable overheads based on actual production and the actual cost incurred.

Variable Overhead Efficiency Variance

A measure that reflects the efficiency of variable overhead resource usage by comparing the standard hours allowed with the actual hours used.

November

The eleventh month of the year in the Gregorian calendar, following October and preceding December.