The Primary Purpose of Establishing Quality Control Policies and Procedures

question 41

Multiple Choice

The primary purpose of establishing quality control policies and procedures for deciding whether to accept a new client is to

• A) Enable the CPA firm to attest to the reliability of the client.
• B) Satisfy the CPA firm's duty to the public concerning the acceptance of new clients.
• C) Minimize the likelihood of association with clients whose management lacks integrity.
• D) Anticipate before performing any fieldwork whether an unqualified opinion can be expressed.

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Definitions:

Wholesale Division

A segment of a company that deals with selling goods in large quantities at lower prices, typically to retailers or other businesses rather than direct to consumers.

Contribution Margin

The difference between a company's sales revenue and variable expenses, indicating how much revenue contributes to covering its fixed costs and generating profit.

West Segment

A geographical or operational division of a company that focuses on business activities in the western region or sector.

Break-Even Sales

The amount of revenue from sales that equals the total of the fixed and variable costs, resulting in zero profit.