Which of the Following Statements Is Not Correct

question 89

Multiple Choice

Which of the following statements is not correct?

• A) Analytical procedures are used to isolate accounts or transactions that should be investigated more extensively.
• B) For certain immaterial accounts, analytical procedures may be the only evidence needed.
• C) In some instances, other types of evidence may be reduced when analytical procedures indicate that an account balance appears reasonable.
• D) Analytical procedures use supporting documentation to determine which account balances need additional detailed procedures.

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Definitions:

Financial Solvency

The ability of an entity to meet its long-term financial obligations, indicating a stable and viable fiscal position.

M&M Proposition I

A theory proposed by Modigliani and Miller that, in a perfect market, the value of a firm is unaffected by how it is financed, whether through debt or equity.

Capital Structure

The mix of different types of debt and equity a company uses to finance its operations.

Tax

Mandatory financial charges or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.