In the Audit of the Transactions and Amounts in the Capital

question 61

Multiple Choice

In the audit of the transactions and amounts in the capital acquisitions and repayments cycle, the auditor must take great care in making sure that the significant legal requirements affecting the financial statements have been properly fulfilled and:

• A)any violations are reported to the SEC.
• B)are adequately disclosed in the financial statements.
• C)must issue a disclaimer if they haven't been fulfilled.
• D)any departures from the agreements are made with management's knowledge and consent.

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Definitions:

Paid-In Capital

The amount of money a company has received from shareholders in exchange for shares of stock, beyond the par value of the shares.

Basic Earnings

The amount of net income available to common shareholders, divided by the common shares outstanding, representing a straightforward measure of earnings without adjustment.

Common Shares

Equity securities that represent ownership interest in a corporation, entitling shareholders to dividends and a say in corporate matters.

Weighted Average

A calculation that takes into account both the quantity and the significance of each item in a set to find an average that is influenced by the size or weight of each component.