In Applying Professional Judgment,the Auditor Must Be Able to Justify

question 11

Multiple Choice

In applying professional judgment,the auditor must be able to justify a decision on the basis that it

• A)is carried out with truthfulness and forthrightness.
• B)meets the underlying principles of only GAAS.
• C)considers the impact on management's performance.
• D)helps the company improve its profitability.

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company, which does not necessarily match its market value.

Common Stock

Equity securities representing ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often receiving dividends before common shareholders.

Subscriptions Receivable-Common Stock

The amount owed to a company from subscribers who have committed to buy its common stock but have not yet paid.