As a Starting Point for Testing Capital Stock and Equity

question 125

Multiple Choice

As a starting point for testing capital stock and equity transactions,which of the following should the auditor perform?

• A)Trace the proceeds of stock sold to the cash receipts journal.
• B)Review the minutes of the board of directors' meetings.
• C)Examine documentation maintained by the transfer agent.
• D)Review a copy of the client's articles of incorporation.

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Definitions:

Fortune 500 Companies

An annual list compiled and published by Fortune magazine that ranks 500 of the largest United States corporations by total revenue for their respective fiscal years.

Licensing

The granting of permission by the owner of a brand, patent, or trademark to another party, allowing them to make, use, or sell a product under certain conditions.

International Markets

Markets that span across countries and continents, allowing for the trading and selling of goods and services globally.

Research and Development Costs

Expenses related to the investigation and discovery of new knowledge, products, or processes, which can improve a company's future performance and competitiveness.