In the Context of an Audit of Financial Statements, Substantive

question 69

Multiple Choice

In the context of an audit of financial statements, substantive tests are audit procedures that

• A) may be eliminated under certain conditions.
• B) are designed to discover significant subsequent events.
• C) are designed to test for dollar misstatements.
• D) will increase proportionately with the auditor's reliance on internal control.

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Definitions:

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, as stated by the issuer.

No Par Common Stock

Shares issued without a nominal or face value, where the value is determined by the price investors are willing to pay.

Stated Value

A value assigned to no-par value stock by the corporation's board, not based on market price but used for accounting purposes.

Issue Price

Issue price is the price at which a new set of securities, such as bonds or stock, is offered to the public for the first time.