When There Is the Potential for Material Misstatements from Purchase

question 76

Multiple Choice

When there is the potential for material misstatements from purchase adjustments transactions, _______.

• A)the auditor should obtain an understanding of all immaterial aspects of the internal control structure components and consider the factors that affect the risk of such misstatements
• B)the auditor should obtain an understanding of all relevant aspects of the internal control structure components and consider the factors that affect the risk of such misstatements
• C)the auditor should obtain an understanding of all relevant aspects of the client legal counsel's internal control structure components and consider the factors that affect the risk of such misstatements
• D)the auditor should obtain an understanding of all relevant aspects of the external control structure components and consider the factors that affect the risk of such misstatements

---

Definitions:

Par Value

The nominal or face value of a bond, stock, or coupon as stated by the issuer.

Earnings per Share

A financial measurement that determines the amount of a company's earnings distributed to each share of its common stock.

Preferred Dividends

Preferred dividends are payments made to holders of preferred shares in a company, typically at a fixed rate, and have priority over common stock dividends in terms of distribution.

Earnings per Share

A company's profit divided by its number of common outstanding shares.