Question
1. If internal control over investments appear to be weak: a. The Board of Directors should be advised. b. Some securities should be counted and
1. If internal control over investments appear to be weak:
a.
The Board of Directors should be advised.
b.
Some securities should be counted and reconciled to brokers' advices, bank transactions, and other appropriate procedure.
c.
All securities should be counted and reconciled to brokers advices, bank transactions, and other appropriate procedures.
d.
The inherent risk increases and more substantive testing of controls needs to be done.
2.
The balance sheet or income statement may be misstated with respect to long-term debt by:
a.
Failing to confirm outstanding amounts and omitting a material undrawn lie of credit.
b.
Failure to disclose loan agreement restrictions that have not been noted or reported by senior management.
c.
Correctly calculating interest payable and resulting in interest arrears.
d.
Incorrectly calculating interest payable, resulting in interest arrears.
3.
Which of the following statements regarding derivative financial instruments is false?
a.
Derivate instruments may result in increased business risk.
b.
Derivative instruments can have a significant impact on audit procedures.
c.
Derivative instruments are relatively simple.
d.
A key control procedure for derivatives is the design of constraints and the monitoring of activities.
4.
Management assertions for owners' equity include:
a.
Correctness.
b.
Validity and accuracy.
c.
Authorization.
d.
Existence and completeness.
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