Investment Cycle

Question 1

In testing long-term investments, an auditor ordinarily would use analytical procedures to ascertain the reasonableness of the

Answer 1

Completeness of recorded investment income.

Question 2

what system would be in place if there are no third-party top safeguard marketable securities

Answer 2

Joint custody by two company officials over assets like cash and marketable securities

Question 3

to establish the existence and ownership of a long-term investment in publicly traded securities.

Answer 3

The auditor would confirm the number of shares held by an independent custodian

Question 4

Existence and ownership is generally evaluated by

Answer 4

inspection of securities, review of brokerage statements, or confirmation with an outside independent custodian.

Question 5

existence

Answer 5

record to source
The source supporting documentation (time cards for example)
Records are the client’s books and calculation

Question 6

completeness

Answer 6

source to records
The source supporting documentation (time cards for example)
Records are the client’s books and calculation

Question 7

A test of details is

Answer 7

one in which specific details are evaluated
test of details with respect to overtime hours might involve looking at time sheets for that week, for example.

Question 8

In a reasonableness test

Answer 8

data in two or more fields are checked for consistency. Comparing overtime hours in the current period to a prior period is one type of reasonableness test.

Question 9

Large companies often use a registrar to

Answer 9

provide registration services and maintain the stockholder list.

Question 10

The primary responsibility of the registrar is to

Answer 10

verify that stock is issued only with proper authorization.
(Provides the number of shares issued and outstanding)