An Auditor Concluded That No Excessive Costs for an Idle

question 20

Multiple Choice

An auditor concluded that no excessive costs for an idle plant were charged to inventory. This conclusion most likely related to the auditor's objective to obtain evidence about the financial statement assertions regarding inventory, including presentation and disclosure, and:

• A)valuation and allocation.
• B)completeness.
• C)existence.
• D)rights and obligations.

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Definitions:

Retained Earnings

The portion of a company's profits not distributed as dividends to shareholders but reinvested in the business.

Dividend

A segment of a corporation's profits given out to its shareholders, typically as cash or more shares.

Balance Sheet

A financial statement that displays a company's assets, liabilities, and equity at a specific point in time.

Dividend Controversy

Dividend controversy revolves around the debate on whether companies should distribute profits to shareholders as dividends or reinvest them in the business.