An Audit Program for the Examination of the Retained Earnings

question 57

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:

Coercive Power

is the ability to influence others' behavior through threats, punishment, or other negative sanctions, relying on fear to gain compliance.

Ostracism

The social or professional exclusion of an individual by their peers or organization, often resulting in negative psychological and emotional consequences.

Sarcasm

The use of irony to mock or convey contempt, often characterized by saying the opposite of what is meant to highlight the absurdity of a situation.

Referent Power

A form of interpersonal power that derives from being admired and respected, leading others to identify with the person having power.