Before Performing a Compilation of the Financial Statements of a Nonpublic

question 64

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:

Sample Proportion

The fraction or percentage of the sample that possesses a certain property or characteristic.

Probability

An indicator of the probability or risk that a certain event will happen, represented by a numerical value ranging from 0 to 1.

Population Mean

The average of a set of numerical values, calculated by summing all the observations and dividing by the total number of observations in the population.

Finite Population

A population set that contains a countable number of elements or observations.