For Infrequently Traded Securities, Which Are Material in Amount, the Auditor

question 22

Multiple Choice

For infrequently traded securities, which are material in amount, the auditor should ordinarily:

• A) estimate the market price themselves
• B) require the security to be classified as a long-term investment.
• C) obtain direct confirmation from an independent broker.
• D) inspect the books of the investee directly.

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Definitions:

Cohesiveness

The property of a group that affectively binds people, as group members, to one another and to the group as a whole, giving the group a sense of solidarity and oneness.

Polarised

Having opinions or characteristics that are directly opposite of each other, often leading to a division.

Extreme

Representing a high degree of a quality or condition, often characterized by actions or opinions that are far from the norm or average.

Self-Categorisation Theory

A psychological theory explaining how individuals classify themselves and others into categories, affecting behavior and social identity.