When an Accountant Is Engaged to Compile a Nonpublic Entity's

question 32

Multiple Choice

When an accountant is engaged to compile a nonpublic entity's financial statements that omit substantially all disclosures required by GAAP,the accountant should indicate in the compilation report that the financial statements

• A)might influence users' conclusions about the business,if the disclosures were included.
• B)are prepared in conformity with a comprehensive basis of accounting other than GAAP.
• C)are not compiled in accordance with Statements on Standards for Accounting and Review Services.
• D)are special-purpose financial statements that are not comparable to those of prior periods.

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Definitions:

Investing Activities

Financial actions related to acquiring or disposing of long-term assets and investments, a component of a company's cash flow statement.

Indirect Method

A technique used in cash flow statements to convert net income into net cash flow from operating activities, by adjusting for non-cash transactions.

Direct Method

A cash flow statement approach that involves listing all major operating cash receipts and payments to calculate net cash from operating activities.

Cash Flows

The total amount of money being transferred into and out of a business, especially affecting liquidity.