When Engaged to Compile the Financial Statements of a Nonpublic

question 63

Multiple Choice

When engaged to compile the financial statements of a nonpublic entity, an accountant is required to possess a level of knowledge of the entity's accounting principles and practices. This requirement most likely will include obtaining a general understanding of the

• A) Stated qualifications of the entity's accounting personnel.
• B) Design of the entity's internal controls placed in operation.
• C) Risk factors relating to misstatements arising from illegal acts.
• D) Internal control awareness of the entity's senior management.

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Definitions:

Stimulus Generalization

The process in which a response that is originally elicited by a specific stimulus also becomes elicited by other, similar stimuli.

Conditioned Response

A learned reaction to a stimulus which occurs because of previous conditioning.

Operant Conditioning

A method of learning that employs rewards and punishments for behavior, leading to the increase or decrease of certain behaviors over time.

Extinction

In psychology, extinction refers to the gradual weakening and eventual disappearance of a learned response, often due to the absence of reinforcement that initially established the response.