Which of the Following Is the Most Important Audit Consideration

question 64

Multiple Choice

Which of the following is the most important audit consideration when examining the stockholders' equity section of a client's balance sheet?

• A)Changes in the capital stock account are verified by an independent stock transfer agent.
• B)Stock dividends and stock splits during the year under audit were approved by the stockholders.
• C)Stock dividends are capitalized at par or stated value on the dividend declaration date.
• D)Entries in the capital stock account can be traced to resolutions in the minutes of meetings of the board of directors.

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Definitions:

Difference Threshold

The smallest amount that a given stimulus must be increased or decreased so that an individual can detect the difference.

Standard Stimulus

A specific stimulus used as a reference point in psychological experiments to measure reactions or perceptions.

Weber's Law

A principle describing the smallest difference in stimulus intensity that is detectable, typically proportional to the intensity of the original stimulus.

Difference Threshold

The smallest change in stimulation that can be detected 50% of the time by a participant.