When the Auditor Is Performing Audit Data Analytics (ADA) as a Substantive

question 53

Multiple Choice

When the auditor is performing audit data analytics (ADA) as a substantive test of details of a population of transactions or balances, _______.

• A)the auditor will have evaluated inherent risk, and will likely have performed tests of controls to assess control risk
• B)the auditor will not have evaluated inherent risk, and will likely have performed tests of controls to assess control risk
• C)the auditor will have evaluated neither inherent risk, nor tests of controls to assess control risk
• D)the results should be immediately sent to management for vetting

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Definitions:

Dividend Yield

A financial ratio that indicates how much a company pays out in dividends each year relative to its share price.

Common Stock

Represents ownership shares in a corporation, giving holders a claim on part of the company’s assets and earnings.

Net Income

Total income of the company after expenses, taxes, and any other costs are deducted from its revenue.

Preferred Dividends

Dividends that are paid to preferred shareholders at a fixed rate before any dividends are paid to common shareholders.