An auditor would most likely verify the interest earned on bond investments by:

Question

Quizplus · Accepted Answer

Choice "C" is correct. Recomputing the interest earned is the most likely method of auditing interest earned on bond investments. Choice "A" is incorrect. Vouching cash receipts would only verify the recording of checks received. This may not be the same as interest earned, since interest is accrued between cash payment dates. Choice "B" is incorrect. Confirmation of the bond interest rate with the issuer is not sufficient, as the rate still needs to be applied based on face amount and period held. Choice "D" is incorrect. Internal control testing of cash receipts would not provide evidence that earned interest was properly recorded, since interest is accrued between cash payment dates.

An Auditor Would Most Likely Verify the Interest Earned on Bond