Which of the following is the most effective audit procedure for verification of dividends earned on investments in marketable equity securities?
A) Tracing deposit of dividend cheques to the cash receipts book.
B) Comparing the amounts received with dividends received in the preceding year.
C) Reconciling amounts received with published dividend records.
D) Recomputing selected extensions and footings of dividend schedules and comparing totals to the general ledger.

Question

Quizplus · Accepted Answer

The most effective audit procedure for verification of dividends earned on investments in marketable equity securities is to reconcile the amounts received with published dividend records. This ensures that the dividends received are accurately recorded and that the amounts are in line with the company's published records. Tracing deposit of dividend cheques to the cash receipts book, comparing the amounts received with dividends received in the preceding year, and recomputing selected extensions and footings of dividend schedules and comparing totals to the general ledger are also valid audit procedures, but they are not as effective as reconciling with published dividend records.

Which of the Following Is the Most Effective Audit Procedure