You Are a Public Accountant Retained by the Manager of a Cooperative

question 32

Multiple Choice

You are a public accountant retained by the manager of a cooperative retirement village to do "write-up work." You are expected to prepare unaudited financial statements with each page marked "unaudited" and accompanied by a disclaimer of opinion stating no audit was made.In performing the work,you discover that there are no invoices to support $25 000 of the manager's claimed disbursements.The manager informs you that all the disbursements are proper.What should you do?

• A)Submit the expected statements but omit $25 000 of unsupported disbursements.
• B)Include the unsupported disbursements in the statements since you are not expected to make an audit.
• C)Obtain from the manager a written statement that you informed him of the missing invoices and include his assurance that the disbursements are proper.
• D)Obtain further information about the $25 000 of unsupported items and withdraw if the situation is not satisfactorily resolved.

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Definitions:

Optimal Consumption

The mix of goods and services purchased that maximizes the utility or satisfaction of a consumer given their budget constraint.

Marginal Utility

The additional pleasure a consumer experiences from acquiring another unit of a product or service.

Marginal Utility Per Dollar

The additional utility gained from spending one more dollar on a good or service.

Diminishing Marginal Utility

The principle stating that as a person consumes more of a good or service, the satisfaction gained from each additional unit decreases.