Which of the Following Is One of the Auditor's Primary

question 18

Multiple Choice

Which of the following is one of the auditor's primary objectives when externally confirming holdings of marketable securities?

• A)To determine whether recorded securities are properly classified on the statement of financial position.
• B)To determine whether recorded securities are the property of the client.
• C)To determine whether recorded securities are appropriately valued in accordance with accounting standards
• D)To determine whether the internal control system for recorded securities is functioning effectively for the period of the audit.

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Definitions:

Forward Exchange Contract

A financial contract between parties to exchange currencies at a predetermined rate on a specified future date.

Contractual Obligation

A duty or commitment that is legally enforceable due to a contract agreement.

Hedging

A financial strategy used to reduce or manage risk associated with price movements of assets by taking an opposite position in a related security.

Hedging Relationship

A risk management strategy where two or more financial instruments are used together to offset potential losses in investments.