What Is the Most Appropriate Method for an Organization to Lower

question 39

Multiple Choice

What is the most appropriate method for an organization to lower information risk related to its financial statements?

• A) Have good bookkeeping work completed on the accounts.
• B) Use a high quality software package keep track of information.
• C) Have an independent financial statement audit conducted.
• D) Have an independent operational audit conducted on effectiveness.

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Definitions:

Retained Earnings

The portion of a company's net earnings not paid out as dividends but retained by the company to be reinvested in its core business or to pay debt.

Constant Growth

A model assuming that a company's dividends will continue to grow at a constant rate indefinitely, used in valuing stocks.

Preferred Stock

A class of stock that has a higher claim on assets and earnings than common stock, often with fixed dividends.

Annual Dividend

The total amount of money paid to shareholders from a company's profits over the course of a year per share of stock.