A Service Center

question 14

Multiple Choice

A service center:

• A)must have an auditor hired by the PCAOB test the controls of the service center.
• B)audit cannot be relied upon by those outside of the firm.
• C)can engage a CPA firm to issue a report on their internal controls for use by all customers and their independent auditors.
• D)must make all of their systems available to any external party.

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Definitions:

Net Income

The total profit of a company after all expenses, including taxes, interest, and operating costs, have been deducted from total revenue.

Dividends

Payments made by a corporation to its shareholders, typically from profits, as a distribution of earnings.

Equity Method

An accounting technique used to record investments in other companies, recognizing income proportional to the ownership percentage.

Net Income

A company's ultimate earnings after all taxes, costs, and expenses are subtracted from the gross income.