An audit team testing long-term investments would ordinarily use analytical procedures to ascertain the reasonableness of the
A) Existence of unrealized gains or losses.
B) Completeness of recorded investment income.
C) Classification as available-for-sale or trading securities.
D) Valuation of trading securities.

Question

Quizplus · Accepted Answer

Analytical procedures would be used to test the completeness of recorded investment income, as this involves comparing the recorded income to the expected income based on market conditions and the investments held. The other options (existence of unrealized gains or losses, classification as available-for-sale or trading securities, and valuation of trading securities) would require more direct testing and verification, such as through examination of supporting documents and market values.

An Audit Team Testing Long-Term Investments Would Ordinarily Use Analytical