Auditors Count Investment Securities Held by the Client Primarily to Test

question 32

Multiple Choice

Auditors count investment securities held by the client primarily to test the ASB balance assertion of

• A) Existence.
• B) Rights and obligations.
• C) Completeness.
• D) Valuation.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations using its current assets, calculated as current assets divided by current liabilities.

Short-Term Notes Payable

Short-term debts or obligations that are due to be paid within one year, often in the form of promissory notes.

Accruals

Accounting adjustments for revenues that have been earned but not yet received, or expenses that have been incurred but not yet paid.

EBITDA Coverage Ratio

A financial ratio that measures a company's ability to pay off its operating expenses and debts with its EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization).