An Accountant's Report Expressing an Opinion on an Entity's Internal

question 49

Multiple Choice

An accountant's report expressing an opinion on an entity's internal controls should state that

• A) Only those controls on which the accountant intends to rely for purposes of the financial statement audit were reviewed, tested, and evaluated.
• B) The establishment and maintenance of the internal controls is the responsibility of management.
• C) The study and evaluation of the internal controls was conducted in accordance with generally accepted auditing standards.
• D) Distribution of the report is restricted for use only by management and the board of directors.

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Definitions:

Restocking Costs

The expenses associated with replenishing inventory or goods in a business after sales or usage.

Order Cost

The total expenses associated with placing an order for goods or services, including procurement, delivery, and handling fees.

Carrying Cost

The total expense associated with holding inventory, including storage costs, insurance, and loss due to depreciation or obsolescence.

Total Cost

The aggregate of all costs, whether fixed or variable, incurred in producing goods or services.