The First Step for Management in the Risk Assessment Process

question 22

Multiple Choice

The first step for management in the risk assessment process is to identify factors that may increase risk,for example failure to meet prior objectives.Then,management will

• A)assess the likelihood of the risk occurring.
• B)make sure that procedures are developed to eliminate the risk.
• C)estimate the significance of that risk.
• D)develop specific actions to reduce the risk to an acceptable level.

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Definitions:

Subsidiary Company

A subsidiary company is one that is controlled by another company, typically referred to as the parent company, through ownership of more than half of the subsidiary’s voting stock.

Equity Method

This accounting technique is used for consolidating the financial statements of a company in which the investing company holds significant influence, but not full control or majority ownership.

Dividends Received

Income received by shareholders when a company distributes a portion of its profits to its stockholders.

Cash Dividends

Payments made by a company out of its profits to its shareholders, distributing cash among them.