The Auditor of Financial Statements Must Make Very Difficult Interpretations

question 71

Multiple Choice

The auditor of financial statements must make very difficult interpretations regarding authoritative literature.Additionally,the auditor must

• A)consider whether the application of a generally accepted accounting principle best portrays the economic activity of the company.
• B)force management to make certain decisions regarding their financial statements.
• C)disregard independence in order to find the underlying truth of the evidence.
• D)establish new criteria by which financial statements may be compared.

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Definitions:

Dividend Yield Ratio

A ratio that shows the annual dividends a company distributes in relation to its stock price.

Earnings per Share

A financial performance metric that calculates the portion of a company's profit allocated to each outstanding share of common stock, indicating the company's profitability.

Equity Multiplier

A financial ratio indicating the portion of a company’s assets that are financed by stockholder's equity.

Debt-to-equity Ratio

An indicator of the distribution between shareholders' equity and borrowed funds in financing a company's assets.