An Auditor Tests an Entity's Control That Matches Shipping Documents

question 59

Multiple Choice

An auditor tests an entity's control that matches shipping documents to sales invoices before they are recorded in the financial statements as revenue in support of management's financial statement assertion of:

• A)valuation or allocation.
• B)presentation and disclosure.
• C)existence or occurrence.
• D)rights and obligations.

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Definitions:

Par Value

The face value of a bond or stock as stated by the issuing company, often the minimum amount the security can be sold for.

Stockholders' Equity

The value of a company divided among its shareholders, often represented as the difference between assets and liabilities.

Additional Paid-In Capital

The amount of money investors have paid for shares above the nominal value during stock issuances, reflecting excess capital received by a company.

Dividends In Arrears

The unpaid dividends on preferred shares that have not been distributed to shareholders, typically because a company has insufficient profits.