An Auditor Usually Tests the Reasonableness of Dividend Income from Investments

question 68

Multiple Choice

An auditor usually tests the reasonableness of dividend income from investments in stock of public companies by computing the amounts that should have been received by referring to

• A) Dividend record books produced by investment advisory services.
• B) Stock indentures published by corporate transfer agents.
• C) Stock ledgers maintained by independent registrars.
• D) Annual audited financial statements issued by the investee companies.

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Definitions:

Accumulated Depreciation

The cumulative depreciation expense charged to a fixed asset from the time it first became operational.

Net Noncurrent Assets

The total value of a company’s long-term assets minus any liabilities directly associated with those assets.

Accumulated Depreciation

The cumulative reduction in the value of a tangible asset due to wear and tear over time.

Earnings Per Share

A financial metric that divides a company's net income by the number of its outstanding shares, indicating how much money each share makes.