When an Entity Uses a Trust Company as Custodian of Its

question 60

Multiple Choice

When an entity uses a trust company as custodian of its marketable securities, the possibility of concealing fraud most likely would be reduced if the:

• A)trust company has no direct contact with the entity employees responsible for maintaining investment accounting records.
• B)securities are registered in the name of the trust company rather than the entity itself.
• C)interest and dividend checks are mailed directly to an entity employee who is authorized to sell securities.
• D)the trust company places the securities in a bank safe deposit vault under the custodian's exclusive control.

Understand the significance of the effective annual rate (EAR) and the annual percentage rate (APR) in financial decision-making.

Learn the function and purpose of a sinking fund.

Calculate the total amount of payments or costs associated with loans and investments over time.

Understand the principles of compound interest and how it applies to loans and investments.

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Definitions:

Storing

The process of retaining information over time, an essential aspect of memory that allows individuals to preserve and recall experiences, facts, and knowledge.

Acquiring Information

The process of obtaining knowledge or data from various sources, through reading, observation, or research.

Spreading Activation

A theory in cognitive psychology that suggests ideas in the brain are connected in a network, and thinking about one concept triggers the recall of associated concepts.

Nodes

In network theory, points at which lines or pathways intersect or branch, which can refer to elements in a network or connections in a neural network.