Which of the Following Is Correct Concerning the PCAOB's Concept

question 11

Multiple Choice

Which of the following is correct concerning the PCAOB's concept of a significant account?

• A)It is the same as a relevant assertion.
• B)The auditor need only consider significant accounts when controls do not operate effectively.
• C)In deciding whether an account is a significant account one does not consider the effect of internal control.
• D)It is an account for which qualitative materiality considerations are particularly important.

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Definitions:

Net Income

The profit of a company after all expenses and taxes have been deducted from revenue.

Stockholders' Equity

The residual assets of a company that belong to the shareholders, calculated as the total assets minus total liabilities.

Total Asset Turnover Ratio

A financial ratio that measures a company's ability to generate sales from its assets by comparing net sales to average total assets.

Net Profit Margin Ratio

A financial metric that shows the percentage of a company's revenue that remains as profit after all operating expenses, interest, taxes, and preferred stock dividends have been deducted.