The Auditor Will Obtain a Copy of the Client's Articles

question 72

Multiple Choice

The auditor will obtain a copy of the client's articles of incorporation (if applicable) and retain a copy in the permanent file.Important information in the articles of incorporation includes

• A)the interest rates currently being paid for bonds that have been issued.
• B)voting rights of each class of shares issued by the company.
• C)which shares have been redeemed by the company in the current year.
• D)the interest rates that are being received on long-term notes invested.

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Definitions:

Budgeted Amounts

planned financial values or targets for revenues, expenses, assets, liabilities, and equity accounts.

Direct Materials

Raw materials that are directly traceable to the production of a specific product or service.

Direct Labor

The wages and benefits of employees who are directly involved in the production of goods or services.

Fixed Overhead

Regular, ongoing expenses in dictated business operations, such as rent and salaries, that do not vary with production levels.