Inquiry and Analytical Procedures Ordinarily Performed During a Review of a Nonpublic

question 52

Multiple Choice

Inquiry and analytical procedures ordinarily performed during a review of a nonpublic entity's financial statements include:

• A)Analytical procedures designed to identify reportable conditions related to internal control.
• B)Inquiries about accounting principles and practices used.
• C)Analytical procedures designed to test the accounting records by obtaining corroborating evidential matter.
• D)Inquiries of knowledgeable outside parties such as the client's attorneys and bankers.

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Definitions:

Flexible Budgets

Budgets that adjust or flex with variations in activity levels or other relevant factors, allowing more accurate comparisons to actual results.

Cost Driver

A factor, such as machine-hours, beds occupied, computer time, or flight-hours, that causes overhead costs.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent or salaries.

Flexible Budget

A budget that adjusts or varies with changes in volume or activity levels.