B is corrent because the number of transactions affecting owners’ equity are few in number relative to transactions affecting revenue, assets, and liabilities. Generally only dividend payments, sales of stock, treasury stock transactions, and stock dividends affect owners’ equity. Thus, all owners’ equity transactions can be verified in relatively little time.
A is incorrect because a large number of transactions affect assets. To test these transactions, a great deal of audit time would be needed.
C is incorrect because a great number of transactions affect revenue. Testing this large number of transactions would require a great deal of audit time.
D is incorrect because many transactions affect liabilities. Thus, testing a large number of transactions will require a significant amount of audit time.
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