In Its 2004 Through 2006 Inspections, Which of the Following

question 116

Multiple Choice

In its 2004 through 2006 inspections, which of the following was not a deficiency the PCAOB noted related to inadequate testing of stockholders' equity transactions?

• A) The auditors failed to properly address and evaluate the substance, business purpose, or significant terms of the equity arrangements.
• B) The auditors failed to consider the accounting principles potentially applicable to the equity transactions.
• C) The auditors failed to evaluate whether the audit clients had appropriately determined the fair values assigned to equity-based transactions and to test the reasonableness of such fair values.
• D) The auditors failed to disclose each class of stock issued by the clients.

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Definitions:

Gross Domestic Product

The total monetary or market value of all the finished goods and services produced within a country's borders in a specific time period.

Wooden Toy Factory

A manufacturing facility dedicated to the production of toys made from wood, often celebrated for their durability and environmentally friendly materials.

Natural Capital

The world's stocks of natural assets including geology, soil, air, water and all living organisms.