Reports on an Entity's Internal Control Over Financial Reporting

question 91

Multiple Choice

Reports on an entity's internal control over financial reporting

• A) Is required for all companies whether they report to the SEC or not.
• B) Is optional for all companies whether they report to the SEC or not.
• C) Is required by the PCAOB for large public companies and may be performed by a CPA for nonpublic companies.
• D) Is limited to inquiry and analytical procedures for reports for non-SEC companies.

---

Definitions:

Liability

A financial obligation or debt that an entity owes to another that must be paid in the future, such as loans, accounts payable, or mortgages.

Accounting Equation

The fundamental equation that represents the relationship between assets, liabilities, and owner's equity (Assets = Liabilities + Owner's Equity).

Owner's Equity

The residual interest in the assets of a company after deducting its liabilities; also known as shareholders' equity.

Liabilities

Financial obligations owed by a business to others, such as loans, accounts payable, and mortgages.