An Audit Plan for the Examination of the Retained Earnings

question 15

Multiple Choice

An audit plan for the examination of the retained earnings account should include a step that requires verification of the:

• A)Market value used to charge retained earnings to account for a two-for-one stock split.
• B)Approval of the adjustment to the beginning balance as a result of a write-down of an account receivable.
• C)Authorization for both cash and stock dividends.
• D)Gain or loss resulting from disposition of treasury shares.

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Definitions:

False Advertising

The act of misleading consumers through deceptive, incorrect, or misrepresented information in advertisements.

Installment Contract

Under the Uniform Commercial Code, a contract that requires or authorizes delivery in two or more separate lots to be accepted and paid for separately.

Truth-In-Lending Act

A federal law designed to promote informed use of consumer credit by requiring disclosures about its terms and cost.

Truth-In-Lending Act

A federal law designed to promote the informed use of consumer credit by requiring disclosures about its terms and cost.