An Accountant Has Been Asked to Issue a Review Report

question 478

Multiple Choice

An accountant has been asked to issue a review report on the balance sheet of a nonissuer without reporting on the related statements of income, retained earnings, and cash flows. The accountant may issue the requested review report only if:

• A) The balance sheet is not to be used to obtain credit or distributed to the entity's creditors.
• B) The balance sheet is part of a comprehensive personal financial plan developed to assist the entity.
• C) There have been no material changes during the year in the entity's accounting principles.
• D) The scope of the accountant's inquiry and analytical procedures has not been restricted.

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Definitions:

Direct Materials Cost

The cost of raw materials used to produce a product, which are directly attributable to the product.

Direct Labor-Hours

The combined working hours of employees directly contributing to the manufacturing cycle.

Direct Materials Cost

The cost of raw materials directly used in the production of goods or services.

Overhead Cost

All ongoing business expenses not directly attributed to creating a product or service, including rent, utilities, and salaries of non-production staff.