Which of the Following Is Explicitly Included as a Part

question 26

Multiple Choice

Which of the following is explicitly included as a part of the description of management's responsibility in an unmodified audit report?

• A) Management is responsible for making a judgment on which misstatements are material vs. immaterial.
• B) Management is responsible for providing auditors with all relevant evidence.
• C) Management is responsible for the maintenance of internal control.
• D) Management is responsible for listing all illegal acts with a direct effect on financial statement amounts and disclosures.

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Definitions:

Preferred Stock

A class of ownership in a corporation with a fixed dividend that has priority over common stock dividends.

Market Risk Premium

The additional return an investor expects for holding a risky market portfolio instead of risk-free assets.

Dividend Amount

The cash value paid out to shareholders from a company's earnings.

Retention Ratio

The proportion of net income that is retained in the company rather than being paid out as dividends.