In Confirming with an Outside Agent, Such as a Financial

question 30

Multiple Choice

In confirming with an outside agent, such as a financial institution, that the agent is holding investment securities in the entity's name, an auditor most likely gathers evidence in support of management's financial statement assertions regarding:

• A)existence.
• B)rights and obligations.
• C)completeness.
• D)existence, rights and obligations, and completeness.

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Definitions:

Cash Payments

Outflows of cash made by a business, including expenses, creditor payments, and other liabilities, during a specific period.

Statement of Cash Flows

It's a financial document summarizing the total cash entering a company from operational earnings and investment revenues, as well as the cash spent on business-related activities and investment outlays during a specific period.

Operating Activities

Business activities related to the day-to-day operations that generate revenue, such as sales and purchasing of inventory.

Indirect Method

In accounting, a method used to calculate cash flows from operating activities by starting with net income and adjusting for non-cash transactions.