Which of the Following Exemplifies the Role of an External

question 28

Multiple Choice

Which of the following exemplifies the role of an external auditor?

• A) Victor recorded the transactions entered in to by Trident, Inc. in the proper accounting period.
• B) Victor prepared the annual budget of Trident, Inc., and he also helped the department heads prepare budgets for each department.
• C) Victor evaluated the internal controls of Trident, Inc. and reported on the financial position as at the year end.
• D) Victor conducted an investigation into the affairs of Trident, Inc. to allay suspicions of mismanagement of funds.

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Definitions:

Share Earnings

Often referred to as earnings per share (EPS), it's the portion of a company's profit allocated to each outstanding share of common stock.

Retained Earnings

The portion of a company's profits that is kept or retained and not distributed to shareholders as dividends.

Accumulated Profit

The total amount of net income retained in a company over its entire history, not distributed as dividends.

Liquidation

The process of converting assets into cash or cash equivalents by selling them.