The Private Securities Litigation Reform Act Imposes Additional Requirements on Public

question 22

Multiple Choice

The Private Securities Litigation Reform Act imposes additional requirements on public companies reporting to the SEC and their auditors when:

• A) The illegal act has a material effect on the financial statements
• B) Senior management and the board have not acted properly to correct for the act
• C) The failure to correct for the action is reasonably expected to warrant a departure from the standard audit report
• D) All of these are additional requirements

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Definitions:

Materials Quantity Variance

The difference between the actual quantity of materials used in production and the standard quantity allowed for the actual output, multiplied by the standard price per unit of materials.

Materials Price Variance

The difference between the actual unit price paid for an item and the standard price, multiplied by the quantity purchased.

Standard Quantity

The expected or established quantity of materials or labor expected to be used during a manufacturing process or production cycle.

Standard Price

Standard price is the pre-determined cost that a company expects to pay for goods, materials, or services, used in budgeting and cost control.