The Purpose of the Management Letter Is to Inform

question 16

Multiple Choice

The purpose of the management letter is to inform

• A) the auditor with concerns held by the client's management about the audit fee.
• B) the client's management of the auditor's opinion on the company's financial statements.
• C) the client's audit committee's disagreements with management.
• D) the client of the auditor's recommendations for improving its internal controls.

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Definitions:

Cash Collected

The amount of money received by a company during a specific period from all sources, including sales, investments, financing, etc.

Net Sales

The total revenue from sales of products or services less returns, allowances, and discounts.

Accounts Receivable

The money owed to a company by its customers for goods or services that have been delivered but not yet paid for.

Depreciation

The reduction in value of tangible assets over time due to use and wear and tear.