If There Is an Adjustment to Retained Earnings Resulting from a Change

question 56

True/False

If there is an adjustment to retained earnings resulting from a change in accounting principle, the auditor should test the prior period effects of the change, but not test the entry to adjust prior period balances or retained earnings.

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Definitions:

Market Cap

The total market value of a company's outstanding shares of stock, calculated by multiplying the stock's current market price by the total number of shares.

EV/EBITDA Ratio

A valuation metric comparing a company's enterprise value to its earnings before interest, taxes, depreciation, and amortization, highlighting company profitability.

Geographically

Pertaining to or based upon the natural features, population, industries, etc., of regions or places.

Quick Ratio

A liquidity metric indicating a company’s capacity to meet short-term obligations with its most liquid assets without selling inventory.