Your Client Is in the Process of Acquiring Another Company

question 20

Multiple Choice

Your client is in the process of acquiring another company. You have been requested to verify that cash for the company being acquired is properly stated. The audit technique that will yield the most persuasive evidence is:

• A)examination of the company's escrow account.
• B)interview with the company's treasurer and cash manager.
• C)preparation and review of standard bank confirmation inquiries.
• D)analytical computations comparing current cash in the bank with previous accounting periods.

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Definitions:

Marginal Revenue

The extra income a business earns by selling an additional unit of a product or service.

Profit-Maximizing

The process or strategy aimed at achieving the highest possible profit from products or services.

Loss-Minimizing

A strategy or approach aimed at reducing losses in business operations to the lowest possible level.

Profit-Maximizing

The process or strategy of adjusting production and operation methods to achieve the highest possible profit.