A Major Consideration in Verifying the Ending Balance in Fixed

question 123

Multiple Choice

A major consideration in verifying the ending balance in fixed assets is the possibility of existing legal encumbrances. Tests to identify possible legal encumbrances would satisfy the audit objective of

• A) existence.
• B) presentation and disclosure.
• C) detail tie-in.
• D) classification.

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Definitions:

Intentional Destruction

The deliberate act of destroying or causing damage to property or materials.

Magazine Subscriptions

Agreements where individuals pay in advance to receive periodic issues of magazines over a specified time frame.

False Pretenses

The act of deliberately presenting false information with the intent to deceive or mislead.

Ponzi Scheme

A fraudulent investment scam promising high rates of return with little risk to investors, which generates returns for older investors through new investors' capital rather than legitimate profit.