The auditor will examine proceeds and trace them to recorded amounts of the par value of common stock to determine that
A)shares exist and have valid stock certificates.
B)proceeds have been properly distributed between common stock and additional paid-in capital.
C)dividends have been issued in accordance with the stock indenture agreement as approved by the board.
D)shareholders actually have the rights to shares issued by the company in exchange for subscribed funds.

Question

Quizplus · Accepted Answer

The auditor's examination of proceeds is to ensure that they have been properly distributed between common stock and additional paid-in capital. This ensures that the recorded amounts of common stock accurately reflect the amount of funds received from shareholders for the issuance of stock. The other options are not relevant to this specific audit procedure.

The Auditor Will Examine Proceeds and Trace Them to Recorded