It Is Important for the CPA to Consider the Competence

question 22

Multiple Choice

It is important for the CPA to consider the competence of the entity's employees because their competence bears directly and importantly upon the

• A) Cost/benefit relationship of the system of internal control.
• B) Achievement of the objectives of the system of internal control.
• C) Comparison of recorded accountability with assets.
• D) Timing of the tests to be performed.

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Definitions:

Direct Expenses

Costs that are directly traceable to the production of a specific good or service.

Department

A specialized functional area within an organization that focuses on specific tasks or responsibilities.

Profit Center Managers

Individuals responsible for overseeing a unit or department within an organization that directly contributes to its profit.

Revenues

Income generated from normal business operations and includes discounts and deductions for returned merchandise.