Rank the Reliability of the Following Items of Audit Evidence

question 63

Multiple Choice

Rank the reliability of the following items of audit evidence:
1) a sales invoice issued by the company
2) confirmation of an account receivable balance mailed by and returned directly to the auditor
3) minutes of a board meeting
4) a copy of a signed lease agreement

• A) 2, 3, 4, 1
• B) 3, 4, 2, 1
• C) 2, 4, 1, 3
• D) 4, 3, 2, 1

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Definitions:

2-for-1 Split

A stock split in which a company divides its existing shares into two, reducing the price per share while keeping the total market capitalization the same.

Underlying Stock

The stock that is the basis or the security that options, futures, or other derivatives contracts are derived from or based upon.

Options

Financial derivatives that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a specified date.

Held

Describes investments or securities that are retained or possessed over a period without being sold or traded.