Auditors Do Not Need to Design and Perform Procedures in Every

question 65

True/False

Auditors do not need to design and perform procedures in every audit to review for contingent liabilities and subsequent events as part of their phase IV testing.

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Definitions:

Equity

The total value of a company's ownership interest by its shareholders, calculated as assets minus liabilities.

Profitability Ratios

Those ratios—gross profit rate, return on sales, return on total assets, and return on common stockholders’ equity—which measure a company’s ability to earn a profit.

Liquidity Ratios

The two ratios—current ratio and acid test ratio—which measure a company’s ability to pay off short-term debts.

Debt Management

The process of overseeing and controlling an individual's or organization's debt load through various strategies and planning.