Initial Procedures for Substantive Tests of Investments Would Not Ordinarily

question 22

Multiple Choice

Initial procedures for substantive tests of investments would not ordinarily include:

• A) understanding investment policies regarding the proportion of investments in government securities, corporate bonds, and equity securities.
• B) understanding an entity's policy for investing excess cash, its financing activities, and its ability to generate free cash flow.
• C) checking the mathematical accuracy of client-prepared schedules of investments.
• D) determining that subsidiary investment ledgers agree with related general ledger control account balances.
• E) understanding economic drivers that allow an entity to engage in investing activities.

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Definitions:

Independence

The condition or quality of being free from dependence, control, or influence.

Oral Fixation

A concept in psychoanalytic theory suggesting an obsession with oral activities due to unresolved conflicts during the oral stage of psychosexual development.

Passive Personality

A personality trait characterized by a tendency to submit to the will or desires of others, often leading to a lack of assertiveness.

Childlike Dependency

A behavior pattern where an individual relies excessively on others for emotional support or decision making, similar to the dependence of a child on their caregivers.