Which of the Following Is least likely to Be Considered

question 25

Multiple Choice

Which of the following is least likely to be considered a financial statement audit risk factor?

• A)Management operating and financing decisions are dominated by top management.
• B)A new client with no prior audit history.
• C)Rate of change in the entity's industry is rapid.
• D)Profitability of the entity relative to its industry is inconsistent.

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Definitions:

Common Stock

Common Stock represents units of ownership in a company, granting holders voting rights and a share in the company's profits through dividends or stock appreciation.

Direct Method

A cash flow statement compilation approach focusing on the specific cash inflows and outflows, without the need to adjust net income for non-cash transactions.

Day-to-Day Operations

The routine activities required for the running of a business on a regular, daily basis, involving processes, resources, and staff management.

Indirect Method

A method used in the preparation of cash flow statements which adjusts net income for transactions that affect reported net income but did not involve cash.