An Entity Has a Large and Active Investment Portfolio That

question 55

Multiple Choice

An entity has a large and active investment portfolio that is kept in a bank safe-deposit box. If the auditor is unable to examine and count the securities at the balance sheet date but will examine and count the securities shortly thereafter, the auditor most likely will:

• A)request that the bank confirm to the auditor the contents of the safe-deposit box at the balance sheet date.
• B)examine supporting evidence for transactions occurring during the year.
• C)count the securities at a subsequent date and confirm with the bank whether securities were added or removed since the balance sheet date.
• D)request that the entity have the bank seal the safe-deposit box until the auditor can count the securities at a subsequent date.

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Definitions:

Transfer Payments

Payments made by governments to individuals without the expectation of any goods or services in return, aimed at providing economic support.

Taxes

Compulsory financial charges imposed by a government on individuals and organizations to fund public expenditures.

Disposable Income

Money left after taxes and social security contributions have been subtracted, which can be either spent or saved according to personal preference.

Aggregate Spending

The total spending in an economy, including consumption, investment, government expenditures, and net exports.