Which of the Following Procedures Is Usually the First Step

question 63

Multiple Choice

Which of the following procedures is usually the first step in reviewing the financial statements of a nonpublic entity?

• A)Make preliminary judgments about risk and materiality to determine the scope and nature of the procedures to be performed.
• B)Obtain a general understanding of the entity's organization,its operating characteristics,and its products or services.
• C)Assess the risk of material misstatement arising from fraudulent financial reporting and the misappropriation of assets.
• D)Perform a preliminary assessment of the operating efficiency of the entity's internal control activities.

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Definitions:

Diagnosing

The process of identifying a disease or condition from its signs and symptoms through various medical examinations and tests.

Sender-receiver

In communication, the sender-receiver model involves a sender who transmits a message to a receiver who then interprets it.

Daily Bath

The practice of bathing on a daily basis for personal hygiene and relaxation.

Deodorant

A substance applied to the body to prevent or mask body odor by inhibiting bacterial growth or by masking the smell.