The Auditor Is Required to Communicate Certain Matters Related to the Audit

question 41

Multiple Choice

The auditor is required to communicate certain matters related to the audit to those charged with governance in the company.Which of the following items should be communicated to those charged with governance?

• A)the auditor's responsibility under generally accepted accounting principles
• B)significant accounting policies
• C)auditor judgments and accounting estimates
• D)managements' adjustments
• E)auditor's judgments about the quality of the entity's accounting principles
• F)both A and C
• G)both B and E
• H)both D and E

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Definitions:

Fixed Costs

Expenses that do not change with the amount of goods or services produced, such as rent or salaries.

Marginal Costs

Refers to the cost added by producing one extra item of a product, emphasizing its role in decision making regarding production levels.

Variable Costs

Costs that change in proportion to the level of activity or volume of production in a business.

Total Fixed Costs

The total of all expenses that stay the same no matter the amount of production or output.