Substantive Testing Is Typically Used to Audit Shareholders' Equity Because

question 20

Multiple Choice

Substantive testing is typically used to audit shareholders' equity because:

• A)the number of transactions is small.
• B)controls over shareholders' equity transactions are typically weak.
• C)a reliance strategy is most efficient.
• D)the control environment over shareholders equity transactions is usually strong.

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Definitions:

Capital Contributions

Funds or other assets contributed to a corporation or partnership by its owners or partners to support the organization's operations or to increase its equity.

Total Capital Balance

The sum of a company's long-term debt, equity, and retained earnings.

Income Distribution

A statistical measure detailing the way in which total income is spread across the individuals or households within a specific economy.

Net Income

A company's overall earnings following the deduction of all costs, taxes, and expenses from its total revenue.