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:

Buffet Revenue

Income generated from selling all-you-can-eat meal services, typically seen in restaurants that offer buffet-style dining.

All-You-Can-Eat

A service model usually found in restaurants where customers pay a fixed price and can consume as much food as they desire.

Equity Market

A marketplace where shares of publicly held companies are issued and traded, either through exchanges or over-the-counter markets.

Bond Market

A financial market where participants can issue new debt, known as the primary market, or buy and sell debt securities, known as the secondary market.