As a Starting Point for Testing Capital Stock and Equity

question 17

True/False

As a starting point for testing capital stock and equity transactions,the auditor should review a copy of the client's articles of incorporation.

---

Definitions:

Accrual Method

An accounting technique that records revenues and expenses when they are incurred, regardless of when cash transactions occur.

Reversing Entries

An accounting method used to reverse journal entries, typically at the beginning of a new accounting period, to cancel adjustments made in the previous period.

Revenue Accounts

Accounts that track the income generated by a company from its normal business operations or other activities.

Closing Entries

Journal entries made at the end of an accounting period to transfer temporary account balances to permanent accounts.