Before Performing a Compilation of the Financial Statements of a Nonpublic

question 61

Multiple Choice

Before performing a compilation of the financial statements of a nonpublic entity, an accountant should:

• A)perform a thorough study and evaluation of the internal control system.
• B)complete a series of inquiries concerning the entity's procedures for recording, classifying, and summarizing transactions.
• C)design working papers intended to provide sufficient competent evidential matter to afford a reasonable basis for a compilation opinion.
• D)obtain an understanding of the accounting principles and practices of the industry in which the entity operates.

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Definitions:

Deadweight Loss

The decline in economic productivity that happens when a good or service does not reach or cannot reach its equilibrium.

Tax

A required monetary fee or different kind of tax levied on a taxpayer by a government entity to finance government operations and a range of public expenses.

Buyers

Consumers or organizations that acquire products or services for direct use or ownership.

Sellers

Individuals or entities that offer goods or services for sale in a market.