EBK AUDITING & ASSURANCE SERVICES: A SY
10th Edition
ISBN: 9781259293245
Author: Jr
Publisher: MCGRAW HILL BOOK COMPANY
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Chapter 16, Problem 16.19MCQ
To determine
Introduction:
Long Term Investments are assets that entities/organizations intend to hold for a period of more than 1 year at least and has purpose of gaining through regular/periodic income on such investments and has no intention of selling it any time soon.
To select: The correct option.
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What is the importance of each assertion in the audit of investments?
The following are auditor's primary substantive procedures in auditing investments, except: *
A. Assessing potential future investments
B. Verifying existence and ownership of securities
C. Investigating current and potential impairments of investments
D. Reviewing appropriateness of presentation and adequacy of disclosure
An auditor's primary substantive procedures for investments typically include evaluating the accounting methods used and testing the valuation. Which of the following assertion(s) is(are) addressed by the audit procedures previously mentioned? *
A. II and V
B. IV and V
C. I, II, V and VI
D. II, IV and V
Chapter 16 Solutions
EBK AUDITING & ASSURANCE SERVICES: A SY
Ch. 16 - Prob. 16.1RQCh. 16 - Prob. 16.2RQCh. 16 - Prob. 16.3RQCh. 16 - Prob. 16.4RQCh. 16 - Prob. 16.5RQCh. 16 - Prob. 16.6RQCh. 16 - Prob. 16.7RQCh. 16 - Prob. 16.8RQCh. 16 - Prob. 16.9RQCh. 16 - Prob. 16.10RQ
Ch. 16 - Prob. 16.11RQCh. 16 - Prob. 16.12MCQCh. 16 - Prob. 16.13MCQCh. 16 - Prob. 16.14MCQCh. 16 - Prob. 16.15MCQCh. 16 - Prob. 16.16MCQCh. 16 - Prob. 16.17MCQCh. 16 - Prob. 16.18MCQCh. 16 - Prob. 16.19MCQCh. 16 - Prob. 16.20MCQCh. 16 - Prob. 16.21MCQCh. 16 - Prob. 16.22MCQCh. 16 - Prob. 16.23MCQCh. 16 - Prob. 16.24PCh. 16 - Prob. 16.25PCh. 16 - Prob. 16.26PCh. 16 - Prob. 16.27PCh. 16 - Prob. 16.28PCh. 16 - Prob. 16.29PCh. 16 - Prob. 16.30P
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Similar questions
- An auditor is establishing procedures for testing management’s assertions regarding existence in relation to reported investments in marketable securities. The auditor is considering using confirmations or observation. Which of these techniques would be appropriate for obtaining evidence about existence? A. Confirmations Only B. Observations Only C. Neither confirmations nor observations D. Both confirmations and observationsarrow_forwardAudit Objectives and Procedures for Investments. In the audit of investment securities, auditors develop specific audit assertions related to the investments. They then design specific substantive procedures to obtain evidence about each of these assertions. Following is a selection of investment securities assertions:1. Investments are properly described and classified in the financial statements.2. Recorded investments represent investments actually owned at the balance-sheet date.3. Investments are properly valued at the balance-sheet date.Required:For each of these assertions, select the following audit procedure that is best suited for the audit plan. Select only one procedure for each assertion. A procedure may be selected once or not at all. a. Trace opening balances in the general ledger to prior-year audit documentation.b. Determine whether employees who are authorized to sell investments have access to cash.c. Examine supporting documents for a sample of investment…arrow_forwardHow do you assess the risk of material misstatement associated with the audit of investments?arrow_forward
- How is the directional risk of investments applied in determining the appropriate audit procedures to be performed?arrow_forwardIn the audit of bond investments classified as FA @ amortized cost, the auditor must consider that the interest recognized by the client are those interest received in cash plus accrued interest based on the face amount of the bond investments. Select one: True Falsearrow_forwardWhen individuals evaluate their portfolios, they should evaluate all Select one: a. marketable securities and other liquid assets. b. assets and liabilities. C. marketable securities. d. assets.arrow_forward
- In testing the valuation of the company's quoted investments in stocks measured at fair value, the auditor would most likely perform the following: a. Obtain the market price of the investments in stocks b. Obtain representation from the management's expert. c. Send confirmation letter's to the company's trading agent. d. Engage the auditor's expert.arrow_forwardAn auditor's primary substantive procedures for investments typically include confirmation of securities or evidence of ownership that are held by the client or by a third party. Which of the following assertion(s) is(are) addressed by the audit procedure previously mentioned? * A. I only B. I and V only C. II and V only D. I and VII onlyarrow_forwardAn auditor's primary substantive procedures for investments typically include impairment testing. Which of the following assertion(s) is(are) addressed by the audit procedure previously mentioned? * A. III only B. IV only C. III and IV D. IV, V and VIIIarrow_forward
- Which of the following is not an analytical procedure? O a. Determine the nature of the audit O b. Analysis of significant ratios and trends OC. Analysis of relationships between financial and non-financial data O d. Comparison with prior period informationarrow_forwardRequirement: Indicate where management assertions are being validated by the below substantive auditprocedures. Existence/Occurrence(E/O) Rights &obligations(R/O) Completeness(C) Valuation andallocation/Accuracy(V/A) Presentation& disclosure(P/D) a. Inspect securities on handand confirm securitiesheld by custodian.b. Trace serial numberindicated in the securityto the list of investmentsecurities maintained bythe client.c. The investment securitieslisted on the schedule ofinvestment transactionsof the client aremathematically accurateand agree with thegeneral ledger.d. Read minutes of meetingof board of directorsregarding investmentsused as collateral forborrowings.e. Recalculate gains andlosses on sale ofsecurities.f. Recalculate interest anddividend revenues.g. Inspect securitiessimultaneously with countof other liquid assets.h. Verify fair values ofsecurities with publishedprice quotations.i. Obtain an understandingon management’s processin classifying…arrow_forwardHow can the auditor determine that all dividends applicable to marketable securities owned by the client have been received and recorded?arrow_forward
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