The Amount of Time Spent Verifying Owners' Equity Is Frequently

question 60

Multiple Choice

The amount of time spent verifying owners' equity is frequently minimal for closely held corporations because

• A) these companies are so small that it is not necessary to audit the capital section.
• B) the few owners all have access to the books so the auditor spends more time on accounts like liabilities, which affect outsiders.
• C) there are few if any transactions during the year for the capital stock accounts, except for earnings and dividends.
• D) there is no public interest in these companies.

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Definitions:

Future Value

The future financial worth of an asset or cash that equates to a designated current sum.

Cash Flows

The whole summation of cash transfers affecting a business's in and outflows, prominently affecting its quick access to funds.

Interest Rate

The charge, expressed as a proportion of the principal, required by a lender from a borrower for asset utilization.

Compounded Quarterly

Interest calculation method where interest is added to the principal sum of a deposit or loan every quarter, leading to interest on interest.