Describe the Five Types of Audit Tests

question 15

Essay

Describe the five types of audit tests. Identify which of the five types are substantive tests, and which are used to reduce assessed control risk.

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Definitions:

Reverse Stock Split

A corporate action in which a company reduces the total number of its outstanding shares to increase its share price.

Par Value

The face value of a bond or stock as stated by the issuing company, not necessarily its market value.

Clientele Effect

A theory suggesting that changes in dividend policy may attract different groups of investors based on their preferences for dividend payouts versus capital gains.