For Each Test of Transactions and Each Test of Account

question 41

Essay

For each test of transactions and each test of account balances for investments listed below,identify the assertion for which the test provides evidence.
1.Determine whether there has been any permanent impairment in the value of the cost basis of an individual security.
2.Inspect securities if they are maintained by the client or obtain a confirmation from an independent custodian.
3.Search for purchases of securities by examining transactions for a few days after year-end.
4.Examine brokers' advices for a sample of securities purchased during the year.

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Definitions:

Incremental

Relating to or denoting an increase or addition, especially one of a series on a fixed scale.

After-tax Cost

The cost of financing or an expense after accounting for the effects of income tax, often used to compare the true costs of financing options.

Customer Loyalty

The likelihood of repeated business from a customer demonstrated by their repeat purchases or preference for a business's product or service over competitors.