The Date of the Management Representation Letter Received from the Client

question 151

Multiple Choice

The date of the management representation letter received from the client should

• A) be the date of latest subsequent event disclosed in the notes to the financial statements.
• B) be dated no earlier than the date of the audit report.
• C) have the same date as the date of the balance sheet.
• D) have the same date as the date of the engagement letter.

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Definitions:

Salaries Payable

An account reflecting the debts to workers for performed but unpaid work.

Closing Entry

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, ultimately resetting the balances of temporary accounts to zero.

Income Summary

An account used in the closing process that summarizes the results of operations by collecting all revenue and expense account balances before determining the net income or loss.

Retained Earnings

The cumulative amount of profits that have been reinvested in the business rather than distributed to shareholders as dividends.