Which of the Following Is Explicitly Included as a Part

question 38

Multiple Choice

Which of the following is explicitly included as a part of the description of management's responsibility in a nonpublic company unmodified audit report?

• A)Management is responsible for making a judgment on which misstatements are material vs.immaterial.
• B)Management is responsible for providing auditors with all relevant evidence.
• C)Management is responsible for the maintenance of internal control.
• D)Management is responsible for listing all illegal acts with a direct effect on financial statement amounts and disclosures.

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Definitions:

Fixed Overhead

Expenses that do not vary with the level of production or sales, including rent, salaries, and insurance costs.

Period Cost

Costs that are not directly tied to the production process and are instead expensed in the period they are incurred, such as selling, administrative, and other expenses.

Manufacturing Costs

The total expenses involved in making a product, including direct materials, direct labor, and factory overhead.

Absorption Costing

An accounting method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a product.