Question

Which of the following is most likely to be an audit objective in the audit of owners' equity?

Option 1: Ensuring compliance with environmental regulations
Option 2: Validating the proper classification of long-term liabilities
Option 3: Confirming the accuracy of revenue recognition
Option 4: Verifying the accuracy of dividend distributions

Answer 1

The most likely audit objective in the audit of owners' equity is verifying the accuracy of dividend distributions.

Step-by-step explanation:

The audit objective most likely to be related to owners' equity is verifying the accuracy of dividend distributions. Owners' equity represents the residual interest in the assets of a company after deducting liabilities. Dividend distributions are one way in which a company returns profits to its owners. Verifying the accuracy of dividend distributions ensures that the dividends are correctly accounted for and distributed to the owners.