Under Which of the Following Circumstances Would It Be Advisable

question 114

Multiple Choice

Under which of the following circumstances would it be advisable for the auditor to confirm accounts payable with creditors?

• A)Internal accounting control over accounts payable is adequate, and there is sufficient evidence on hand to minimize the risk of a material misstatement.
• B)Confirmation response is expected to be favorable, and accounts payable balances are of immaterial amounts.
• C)Creditor statements are not available and internal control over payables is unsatisfactory.
• D)The majority of accounts payable balances are with associated companies.

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Definitions:

Stock Market

A public market for the trading of company stock and derivatives at agreed prices.

Dividend Stream

Dividend Stream is the sequence of cash payments made to shareholders of a corporation over time, typically derived from the company's earnings.

Required Return

The least amount of return expected by an investor from putting money into a certain asset, while taking its risk profile into account.

Intrinsic Value

The perceived or calculated true value of an asset, investment, or company, based on fundamentals, independent of market value.