When an Accountant Compiles a Nonpublic Entity's Financial Statements That

question 22

Multiple Choice

When an accountant compiles a nonpublic entity's financial statements that omit substantially all disclosures required by generally accepted accounting principles, the accountant should indicate in the compilation report that the financial statements are:

• A)restricted for internal use only by the entity's management.
• B)not to be given to financial institutions for the purpose of obtaining credit.
• C)compiled in conformity with a comprehensive basis of accounting other than generally accepted accounting principles.
• D)not designed for those who are uninformed about the omitted disclosures.

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Definitions:

Profit-sharing Bonuses

A type of incentive given to employees where they receive a share of the company’s profits, typically as part of their compensation package.

Seniority

The concept of giving preference to employees with longer tenure in aspects of employment such as promotions, pay increases, and layoffs.

Equal Distribution

A principle of fairness where resources, wealth, or opportunities are shared equally among all members of a society or group.

Historical Benchmark

A reference point or standard for comparison derived from past data or trends, used in evaluating current performance or conditions.