Entries for dividend declarations and retained earnings appropriations are traced to the minutes book. In determining the propriety of the distribution, the auditor should:
A) establish that preferential or other rights of stockholders and any restrictions on dividend distributions have been recognized.
B) establish the number of shares outstanding on the date of record and verify the accuracy of the total dividend declaration by recalculation.
C) ascertain the propriety of the entry to record the declaration.
D) review the minutes to provide evidence of stockholders' equity transactions authorized during the year.
E) trace dividend payments to canceled checks and other documentation.

Question

Quizplus · Accepted Answer

The Answer of Entries for dividend declarations and retained earnings appropriations are traced to the minutes book. In determining the propriety of the distribution, the auditor should:
A) establish that preferential or other rights of stockholders and any restrictions on dividend distributions have been recognized.
B) establish the number of shares outstanding on the date of record and verify the accuracy of the total dividend declaration by recalculation.
C) ascertain the propriety of the entry to record the declaration.
D) review the minutes to provide evidence of stockholders' equity transactions authorized during the year.
E) trace dividend payments to canceled checks and other documentation.

Entries for Dividend Declarations and Retained Earnings Appropriations Are Traced