If the Auditor Decides to Draw Attention to Large Related

question 40

Multiple Choice

If the auditor decides to draw attention to large related party transactions occurring in the financial statements of the client, which report will most likely be issued?

• A) Qualified.
• B) Unqualified with an explanatory paragraph
• C) Adverse.
• D) Consolidation.

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Definitions:

Capital Gain

The profit from selling a capital asset for more than its purchase price.

Dividends

Payments made by a corporation to its shareholders from the earnings of the company, usually in the form of cash or stocks.

Shares

Holdings in a corporation or financial asset, these units confer rights to an equitable distribution of dividends from declared profits.