Which one of the following is NOT a characteristic of the capital acquisition and repayment cycle?
A) Relatively few transactions affect the account balances, but each transaction is often highly material in amount.
B) The exclusion of a few transactions is rarely material by itself.
C) There is a legal relationship between the client and the holder of the equity securities.
D) There is a direct relationship between the interest and dividends accounts and debt and equity.

Question

Quizplus · Accepted Answer

The capital acquisition and repayment cycle typically involves transactions that are highly material in amount, and the exclusion of even a few transactions can be material due to their size and impact on the financial statements. This makes choice B incorrect as it suggests the opposite.

Which One of the Following Is NOT a Characteristic of the Capital