The Auditor's Communication of Material Weaknesses in Internal Control for a Nonpublic

question 31

Multiple Choice

The auditor's communication of material weaknesses in internal control for a nonpublic company is:

• A)required to enable the auditor to state that the examination has been made in accordance with generally accepted auditing standards.
• B)the principle reason for studying and evaluating the system of internal controls.
• C)required even though the financial statement audit for private companies does not require an audit of the entity's system of internal control.
• D)required to be included as part of the audit opinion.

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Definitions:

Prepaid Rent

An accounting term for payments made in advance for rent that covers future periods, recorded as an asset on the balance sheet until it is consumed.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded against a fixed asset since it was acquired and put into use.

Unearned Ticket Revenue

Revenue received from tickets sold for future events, which is considered a liability until the service (the event) is provided.

Adjusted Trial Balance

An accounting worksheet that reflects the account balances after adjustments are made for accruals and deferrals at the end of a reporting period.