A Major Consideration in Verifying the Ending Balance in Fixed

question 123

Multiple Choice

A major consideration in verifying the ending balance in fixed assets is the possibility of existing legal encumbrances. Tests to identify possible legal encumbrances would satisfy the audit objective of

• A) existence.
• B) presentation and disclosure.
• C) detail tie-in.
• D) classification.

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Definitions:

May Coffee Futures

Agreements that bind the purchaser to buy, and the seller to sell coffee, at an agreed price and date in the future.

Lifetime High

The highest price level reached by a stock, bond, or other security during its entire trading history.

Lifetime Low

The lowest price level that a stock or security has reached over the entirety of its trading history.

Forward Contract

A tailor-made agreement between two entities to purchase or sell a valuable at an agreed price on a predetermined date in the future.