2. Required: On your answer paper, write the numbers 1 to 5 on separate lines. Then, beside each number, write the capital letter (A, B, C, D, or E) of the phrase that best completes the statement 1. Retained carnings represent: A. the amount invested in the entity by the shareholders. B. the amount of cash that has been paid as dividends. C. cumulative net profit that has not been distributed to shareholders as dividends. D. the total wealth attributable to shareholders. E. None of the above is a correct definition of retained earnings. The income statement shows amounts for: A. revenues, expenses, losses, and liabilities. revenues, expenses, gains, and capital. C. revenues, assets, gains, and losses. D. revenues, gains, expenses and losses. E. revenues, gains, expenses, dividends and losses. A prepaid expense, such as prepaid rent, is recorded as a current asset because A. the prepaid expense will be returned for a cash refund. B. the prepaid expense represents a right to receive future economic benefit. c. the expense has been incurred but not yet paid. D. recognising it as an expense will make net profit higher for the current accounting period. E. All of the above are correct. B. 3. 1 4. that 5. An unmodified (i.c., clean) audit opinion of a set of general purpose financial reports indicates A. the financial statements are fairly presented. B. the financial statements are free from any error or misstatement. C. the financial statements are absolutely reliable. D. the financial statements are ready to be presented to the directors. E. None of the above are correct. "An auditor should not allow bias, conflict of interest or undue influence of others to override his or her professional judgments." Which ethics principle, according to the Professional and Ethics Standard 1 in New Zealand, is this statement referring to? A. Professional competence and due care B. Professional behaviour C. Confidentiality Integrity E. Objectivity D