The Most Reliable Evidence from Confirmations Is Obtained When They

question 41

Multiple Choice

The most reliable evidence from confirmations is obtained when they are sent

• A) as close to the balance sheet date as possible.
• B) at various times throughout the year to different segments of the sample, so that the entire sample is representative of account balances scattered throughout the year.
• C) several months before the year-end, so the auditor will have adequate time to perform alternate procedures if they are required.
• D) at various times throughout the year to the same group in the sample, so that the sample will not have a time bias.

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Definitions:

Monetary Control Act

A 1980 United States federal law that aimed to improve the Federal Reserve's control over monetary policy and to ensure more effective financial regulation.

Excess Reserves

The funds that banks hold over and above the legal requirement set by a central bank or banking regulator.

Commercial Bank

A firm that engages in the business of banking, accepting deposits, offering checking accounts, and making loans.

Deposit Expansion Multiplier

A ratio that measures the potential increase in money supply from an initial deposit through the banking system's ability to lend and create money.