Which of the Following Characteristics of the Client's Management Affects

question 5

Multiple Choice

Which of the following characteristics of the client's management affects the risk of material misstatements in the financial report?

• A) Ability to respond to risk
• B) Philosophy and operating style
• C) Ability to identify risk
• D) All three of the above

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Definitions:

Shares Outstanding

The total number of a company's shares that are currently held by all its shareholders, including share blocks held by institutional investors and restricted shares.

Depreciation Expense

Allocating the cost of a physical asset systematically throughout its period of effectiveness.

Net Capital Spending

Net capital spending is the total expenditure on fixed assets minus any sales of fixed assets, indicating a company's investment in its physical assets.