What Is the Primary Role and Responsibility of Independent External

question 13

Multiple Choice

What is the primary role and responsibility of independent external auditors?

• A)to prepare a company's annual financial statements and notes.
• B)to perform an audit and provide an opinion on the financial statements of a company.
• C)to provide business consulting advice to audit clients.
• D)to obtain an understanding of a client's internal control system and prepare a report for management about control weaknesses.

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Definitions:

Contribution Margin

The difference between sales revenue and variable costs, indicating how much of the revenue contributes to covering fixed costs and generating profit.

Fixed Costs

Costs that do not change with the level of production or sales, such as rent and insurance.

Break-even Sales

The amount of revenue needed to cover both fixed and variable costs, resulting in zero net income or loss.

Variable Costs

Expenses that change in proportion to the activity or volume of production or sales, such as raw materials and direct labor.