An Audit Team Would Most Likely Verify the Interest Earned

question 10

Multiple Choice

An audit team would most likely verify the interest earned on bond investments by:

• A)vouching the receipt and deposit of interest checks.
• B)confirming the bond interest rate with the issuer of the bonds.
• C)recomputing the interest earned on the basis of face amount, interest rate, and period held.
• D)testing internal controls relevant to cash receipts.

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Definitions:

Contracts

Legally binding agreements between two or more parties that create mutual obligations.

Sherman Act

The Sherman Act is a landmark federal statute in the field of U.S. antitrust law passed by Congress in 1890, which prohibits monopolistic business practices and promotes competition.

Illegal Per Se

Refers to actions or conditions that are inherently illegal, without the need for additional proof of their harmfulness or illegality.

Market Allocations

Agreements between competitors to divide markets among themselves, often considered illegal under antitrust laws.