Which of the Following Audit Tests Both Have the Effect

question 35

Multiple Choice

Which of the following audit tests both have the effect of simultaneously verifying balance sheet and income statement accounts?

• A)Analytical procedures and substantive tests of transactions
• B)Tests of controls and substantive tests of transactions
• C)Tests of details of balances and substantive tests of transactions
• D)Tests of controls and analytical procedures

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Definitions:

Coupon

The interest rate paid every year on a bond, presented as a percentage of its par value.

Maturity

The period until the final payment date of a loan, bond, or other financial instrument.

Altman's Z Scores

A formula developed by Edward Altman in the 1960s used to predict the likelihood of a business going bankrupt within two years, based on various corporate income and balance sheet values.

Bankruptcy Risk

The likelihood that a company will be unable to meet its financial obligations and be forced into bankruptcy, causing potential losses for investors.