In Establishing the Existence and Ownership of a Long-Term Investment

question 31

Multiple Choice

In establishing the existence and ownership of a long-term investment in stock of a publicly traded company, an auditor should inspect the securities or:

• A)correspond with the investee company to verify the number of shares owned.
• B)inspect the audited financial statements of the investee company.
• C)confirm the number of shares owned that are held by an independent custodian.
• D)determine that the investment is carried at the lower-of-cost-or-market.

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Definitions:

Participant

An individual who takes part in a study or experiment, providing data for researchers to analyze.

Equal Chance

The principle that each participant or subject in a study has an equal probability of being chosen for any given condition or treatment.

Confounding Variable

is an external factor in a research study that may affect the outcome of the experiment, leading to inaccurate conclusions if not controlled.

Intelligence

The ability to acquire, understand, and use knowledge, as well as to engage in abstract thinking and problem-solving.