Which One of the Following Statements Is NOT Correct

question 7

Multiple Choice

Which one of the following statements is NOT correct?

• A) Internal controls vary from company to company; therefore, the auditor must identify the controls and deficiencies for each organisation.
• B) The substantive tests of transactions will vary depending on the assessed control risk.
• C) The tests of controls and substantive tests of transactions are combined where appropriate.
• D) The auditor must perform tests of controls on all of the client's internal controls.

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Definitions:

Book Value Per Share

A measure used to gauge a company's financial health, calculated by dividing total shareholder's equity minus preferred equity by the number of outstanding common shares.

Stock Dividend

A payment made to shareholders in the form of additional shares, rather than cash, reflecting the company's decision to reinvest the profit.

Liability

A company's legal financial debts or obligations that arise during the course of business operations.

Retained Earnings

Profits that a company has decided to keep and reinvest in the business rather than distribute to shareholders.