As a Starting Point for Testing Capital Stock and Equity

question 125

Multiple Choice

As a starting point for testing capital stock and equity transactions,which of the following should the auditor perform?

• A)Trace the proceeds of stock sold to the cash receipts journal.
• B)Review the minutes of the board of directors' meetings.
• C)Examine documentation maintained by the transfer agent.
• D)Review a copy of the client's articles of incorporation.

---

Definitions:

Expectancy Disconfirmation Model

A consumer satisfaction framework that compares actual product or service performance against pre-consumption expectations.

Expectancy Confirmation Model

A psychological theory suggesting that people tend to seek, interpret, favor, and recall information that confirms their pre-existing beliefs and expectations.

Identity Negotiation

A social psychological process where individuals engage in establishing, maintaining, or revising their personal identity or social position within different contexts.

Middle-aged Man

An adult male who is in the middle stage of life, typically considered between the ages of approximately 45 and 65.