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:

Dual Code

A theory suggesting that information is stored in the brain in two distinct forms: visual imagery and verbal symbols.

Paivio’s Hypothesis

A theory that suggests that visual and verbal information are processed differently and along separate channels in the human mind, enhancing memory.

Long-Term Memory

The phase of the memory system that is capable of storing a large amount of information for periods ranging from hours to decades.

Visuo-Verbal

Relating to or involving both visual and verbal processes, such as the integration of visual imagery with spoken or written language.