An Auditor Determines That There Is an Inherent Risk That

question 31

Multiple Choice

An auditor determines that there is an inherent risk that a company has not included both the basic earnings per share and diluted earnings per share amounts in financial statements even though significant dilutive securities are part of the company's complex capital structure.This determination is most likely tied to which of the following management assertions?

• A)Valuation.
• B)Presentation and disclosure.
• C)Rights and obligations.
• D)Existence.

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Definitions:

Federal Open Market Committee

A branch of the Federal Reserve that oversees open market operations, including the buying and selling of government securities, to influence the money supply and interest rates.

Open Market Operations

The buying and selling of government securities by a central bank to control the money supply and interest rates in the economy.

Federal Reserve

The central banking system of the United States, responsible for conducting national monetary policy and overseeing financial institutions.

Excess Reserves

The difference between actual reserves and required reserves.