Public Companies ________

question 224

Multiple Choice

Public companies ________.

• A) must issue an internal control report which states that the outside auditor is responsible for the adequacy of internal controls
• B) are audited by accounting firms that do not also provide certain consulting services to the public company
• C) are required by the Financial Accounting Standards Board to maintain a system of internal controls
• D) are overseen by the Public Company Accounting Oversight Board

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Definitions:

Fixed Expenses

Costs that do not change with the level of production or sales over a certain period, such as rent or salaries.

Variable Costing

An approach in accounting that takes into account only the variable aspects of production costs (such as direct materials, direct labor, and variable manufacturing overhead) in the computation of product prices.

Net Operating Income

Net Operating Income is a measure of a company's profitability from its regular business operations, excluding income and expenses from interest, taxes, and other non-operational activities.

Fixed Manufacturing Overhead

Regular, constant expenses related to the production process that are not affected by the level of goods produced, such as rent and salaries of management.