An Audit Team Testing Long-Term Investments Would Ordinarily Use Analytical

question 75

Multiple Choice

An audit team testing long-term investments would ordinarily use analytical procedures to ascertain the reasonableness of the:

• A)existence of unrealized gains or losses.
• B)completeness of recorded investment income.
• C)classification as available-for-sale or trading securities.
• D)valuation of trading securities.

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Definitions:

Debt Securities

Financial instruments that represent a loan made by an investor to a borrower, typically consisting of corporate bonds, government bonds, and other types of loans.

Financial Institutions

Intermediary between savers and borrowers, collecting funds from savers and then lending the funds to individuals, businesses, and governments.

Certificate of Deposit

A financial product offered by banks that provides an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period.

Time Deposit

A bank deposit with a fixed term or maturity date, often yielding higher interest rates than savings accounts.