An Audit Program for the Examination of the Retained Earnings

question 15

Multiple Choice

An audit program for the examination of the retained earnings account should include a step that requires verification of the

• A) Gain or loss resulting from disposition of treasury shares.
• B) Market value used to charge retained earnings to account for a two-for-one stock split.
• C) Authorization for both cash and stock dividends.
• D) Approval of the adjustment to the beginning balance as a result of a write-down of an account receivable.

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Definitions:

Cultural Tradition

The inherited and shared ways of living, which include beliefs, practices, and artifacts, carried from one generation to the next.

Continuous-process Technology

A production method characterized by a constant and non-interrupted manufacturing process.

Assembly-line System

A manufacturing process in which parts are added to a product in a sequential manner using a flow production method to create finished products efficiently.

Retentive

Having the ability to retain or hold onto information, knowledge, or materials over a period of time.