Which of the Following Statements Is True of External Auditing

question 19

Multiple Choice

Which of the following statements is true of external auditing?

• A) Major focus areas are processes, including risks, controls, and effectiveness and efficiency of processes.
• B) External auditors perform both assurance and consulting services for public companies.
• C) Primary scope of services performed includes audits of financial statements.
• D) The primary client for a public company is upper management.

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Definitions:

Diluted Earnings Per Share

A metric that calculates a company’s earnings per share considering all potentially convertible securities.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock and usually receives dividends before common shareholders.

Convertible

Refers to a security, usually a bond or a preferred stock, that can be converted into a specified number of shares of common stock.

Common Stock

A type of security that signifies ownership in a corporation, entitling the shareholder to a share of the corporation's profits and assets.