An Accountant's Report Expressing an Opinion on an Entity's Internal

question 49

Multiple Choice

An accountant's report expressing an opinion on an entity's internal controls should state that

• A) Only those controls on which the accountant intends to rely for purposes of the financial statement audit were reviewed, tested, and evaluated.
• B) The establishment and maintenance of the internal controls is the responsibility of management.
• C) The study and evaluation of the internal controls was conducted in accordance with generally accepted auditing standards.
• D) Distribution of the report is restricted for use only by management and the board of directors.

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Definitions:

Operating Activities

Activities that relate directly to the primary business operations of a company, such as selling goods and services.

Sale of Machinery

The transaction involving the disposal of machinery assets, either due to replacement, upgrading, or discontinuation of use, which can impact a company's financial statements.

Investing Activities

Transactions involving the purchase and sale of long-term assets and other investments, not including cash equivalents, as part of a company's financial operations.

Treasury Stock

Shares that have been issued by a company and then repurchased from the market, reducing the amount of outstanding stock on its balance sheet.