Management Assesses Its Internal Control and Issues a Report on the Effectiveness

question 116

Multiple Choice

Management assesses its internal control and issues a report on the effectiveness of internal controls in connection with the audit of its financial statements.This report includes

• A)a statement of management's responsibility for establishing adequate internal controls over financial reporting
• B)management's assessment of the effectiveness of internal controls over financial reporting
• C)a statement identifying the framework used by the auditors to evaluate the effectiveness of internal controls over financial reporting
• D)a statement that the registered public accounting firm that audited the company's financial statements has issued an attestation report on management's opinion on the company's internal controls over financial reporting

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Definitions:

Direct Labor

The compensation provided to workers directly engaged in manufacturing products or delivering services.

Period Cost

Expenses that are incurred during a specific accounting period but not directly tied to the production process, such as selling, general, and administrative expenses.

General Cost

A type of expense that is not directly tied to production or operations but is necessary for overall business function, like utilities or rent.

Prime Costs

The combined costs of direct materials and direct labor that are directly attributable to the manufacturing process.