In an Audit of Contingent Liabilities, Which of the Following

question 42

Multiple Choice

In an audit of contingent liabilities, which of the following procedures would be least effective?

• A)Examining customer confirmation replies.
• B)Reviewing a bank confirmation letter.
• C)Examining invoices for professional services.
• D)Reading the minutes of the board of directors meetings.

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Definitions:

Slope

A measure of the steepness, incline, or grade of a line, calculated as the ratio of the vertical change to the horizontal change between two points.

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased with a given income and prices.

Expected Return

The average of all possible returns for an investment, weighted by the likelihood of each outcome.

Risky Asset

Asset that provides an uncertain flow of money or services to its owner.