Management Must Disclose Material Weaknesses in Internal Control in Its

question 31

Multiple Choice

Management must disclose material weaknesses in internal control in its audit report:

• A)whenever the weakness is deemed significant to a single class of transactions.
• B)whenever the weakness is significant to overall financial reporting objectives.
• C)if the weakness exists at the end of the year.
• D)only if the auditor identifies the weakness as significant.

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Definitions:

Heavy Equipment

Refers to large and heavy-duty vehicles designed for construction tasks, most notably earthwork operations.

Wholesale Distributor

A business entity that purchases goods in large quantities from manufacturers and sells them in smaller quantities to retailers or other distributors.

Territorial Restriction

A limit imposed on the area or region where a product or service can be sold or provided.

Price-Cutting

The practice of reducing prices, often below the normal value, to attract customers or undermine competitors.