The Accuracy, Valuation, and Allocation Assertion for Prepaid Insurance

question 40

Multiple Choice

The accuracy, valuation, and allocation assertion for prepaid insurance:

• A)is never tested because amounts always are immaterial.
• B)is best tested as part of the testing of property and equipment purchasing.
• C)is best tested exclusively by sending confirmations to vendors.
• D)is best tested by recomputing the unexpired portion of insurance policies in effect.

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Definitions:

Cash Budget

A financial plan that estimates cash inflows and outflows over a specific period to ensure a company has sufficient liquidity.

Financial Statements

Formal records of a company's financial activities and condition, including balance sheet, income statement, and cash flow statement.

Fixed Assets

Fixed Assets, also known as non-current assets, are long-term tangible assets held for business use and not expected to be converted into cash in the upcoming year, such as buildings, machinery, and vehicles.

Sales Increase

The rise in the volume or amount of sales or services sold by a company within a particular period.