The Primary Purpose of Sending a Standard Confirmation Request to Financial

question 29

Multiple Choice

The primary purpose of sending a standard confirmation request to financial institutions with which the entity has done business during the year is to

• A) detect kiting activities that may otherwise not be discovered.
• B) corroborate information regarding deposit and loan balances.
• C) provide the data necessary to prepare a proof of cash.
• D) request information about contingent liabilities and secured transactions.

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Definitions:

Account Balances

The total amount of money in a financial account, determined by adding all credits and subtracting all debits.

Accrued Expenses

Expenses that have been incurred but not yet paid for, resulting in a liability recorded on the balance sheet.

Incurred

Incurred refers to costs or expenses that have been realized or taken on, often in the process of conducting business or other activities.

Stockholders' Equity

The amount of capital given to a company by its shareholders plus its retained earnings.