When Providing Limited Assurance That the Reviewed Financial Statements of a Nonpublic

question 2

Multiple Choice

When providing limited assurance that the reviewed financial statements of a nonpublic entity require no material modifications to be in accordance with generally accepted accounting principles,the accountant should

• A)assess the risk that a material misstatement could occur in a financial statement assertion.
• B)confirm with the entity's lawyer that material loss contingencies are disclosed.
• C)understand the accounting principles of the industry in which the entity operates.
• D)develop audit plans to determine whether the entity's financial statements are fairly presented.

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Definitions:

Unit Sales

The quantity of items sold by a company during a specific period, not accounting for returns or refunds.

Break-Even Sales

The amount of revenue required to cover both the variable and fixed costs of a business, resulting in neither profit nor loss.

Margin Of Safety

The difference between actual sales and sales at the break-even point, providing a cushion that measures the business's ability to withstand sales fluctuations.

Current Sales

The total revenue generated from goods or services sold by a company during the current period.