Which of the Following Statements Best Describes How a Detailed

question 977

Multiple Choice

Which of the following statements best describes how a detailed audit plan of a CPA who is engaged to audit the financial statements of a large publicly held company compares with the audit client's comprehensive internal audit program?

• A) The comprehensive internal audit plan is substantially identical to the audit plan used by the CPA because both cover substantially identical areas.
• B) The comprehensive internal audit plan is less detailed and covers fewer areas than would normally be covered by the CPA.
• C) The comprehensive internal audit plan is more detailed and covers areas that would normally not be covered by the CPA.
• D) The comprehensive internal audit plan is more detailed although it covers fewer areas than would normally be covered by the CPA.

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value.

Stock Value

The current price at which a share of a company's stock can be bought or sold. It is determined by the market and can fluctuate based on demand and supply.

Present Value

The today's worth of future monetary sum or continuous cash flows, considering a defined interest rate.

Dividend Yield

Dividend yield is the ratio of a company’s annual dividends compared to its share price, indicating how much shareholders earn in dividends relative to the share price.