Which of the Following Would an Accountant Not Need to Know

question 15

Multiple Choice

Which of the following would an accountant not need to know when conducting a compilation?

• A)The accounting principles and practices of the industry in which the entity operates.
• B)A general understanding of the nature of the entity's business transactions and the form of its accounting records.
• C)The accounting basis on which the financial statements are to be presented.
• D)The accountant would need to know all of the other items listed when conducting a compilation.

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Definitions:

Financial Information System

A system that collects and processes financial data to produce reports useful for decision-making purposes.

Fair Market Value

An estimate of the price at which an asset would change hands between a willing buyer and seller, neither being under any compulsion to buy or sell and both having reasonable knowledge of relevant facts.

Cost

The amount of money or resources expended in order to obtain an item or service.

Monetary Unit Assumption

An accounting principle that assumes transactions and events can be represented in monetary units or currency.