10. Which of the following statements is TRUE? i. A Broker sets a Maintenance margin which is different from the Initial margin for clients The exchange clearing house sets Initial margin and Maintenance margin to be the same ii. iii. iv. In exchange clearing house, the daily balance in the margin accounts must be maintained at the predetermined level All of the above a) i. but NOT ii. b) Both ii. and iii. but NOT i. c) i. but NOT ii. and iii. d) All the above (i., ii. and iii.)

10. Which of the following statements is TRUE? i. A Broker sets a Maintenance margin which is different from the Initial margin for clients The exchange clearing house sets Initial margin and Maintenance margin to be the same ii. iii. iv. In exchange clearing house, the daily balance in the margin accounts must be maintained at the predetermined level All of the above a) i. but NOT ii. b) Both ii. and iii. but NOT i. c) i. but NOT ii. and iii. d) All the above (i., ii. and iii.)

Auditing: A Risk Based-Approach to Conducting a Quality Audit

10th Edition

ISBN:9781305080577

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter14: Activities Required In Completing A Quality Audit

Section: Chapter Questions

Problem 65RSCQ

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Which of the following is not a feature of a clearing house: A. It is used to reduce counter party risk B. It requires participants to put money into a margin account safe guarding both sides from loss C. Contracts are not standardized allowing for customized contracts D. Positions are marked to market on each trading day
Explain the trade credit facility provided by some companies to their customers that allow them to manage their day-to-day liquidity situation and calculate the opportunity cost of an invoice that specifies the following conditions, as shown below (a. – c.):a) conditions: 1.25/10, n/30.b) conditions: 1.25/10, n/60.c) conditions: 1.5/10, n/60.
26- Which of the following are the suppliers of goods/services whose invoices have not yet been paid? a. Inventory b. Cash c. Accounts Payable d. Accounts Receivable
What is the effect of the following situations on the cost of accounts receivable financing? (A) A more thorough credit check is undertaken. (B) Receivables are sold without recourse CHOOSE THE LETTER OF CORRECT ANSWERA. (A) Increase; (B) DecreaseB. (A) Decrease; (B) IncreaseC. (A) Decrease; (B) DecreaseD. (A) Increase; (B) IncreaseE. (A) Increase; (B) No effect
7. Which of the following statements regarding the gross and net methods for trade accounts payable is not true? a. the net method overstates accounts payable at the end of the accounting periodb. the net method highlights management inefficiency because purchase discounts lost arerecorded whenever an invoice is paid after the cash discount period has expiredc. the gross method is more widely used in practiced. the net method more accurately measures liquidity
19.Which of the following statements is incorrect? a. Trade receivables are recognized simultaneously with the recognition of related revenue when the criteria for revenue recognition are met. b. Under the gross price method, sales discounts are reported as a deduction from sales revenue. c. When accounts receivable are pledged against borrowing, the amount of accounts receivable pledged shall be included in the total receivables with disclosures. d. When discounting notes, the term discount period refers to the period of time that the note has been held by the endorser or payee; i.e. the period from the date of the note up to the date of discounting.
Which of the following statements is true?a. Credit sales increase receivables.b. Collections on account decreasereceivables.c. Write-offs of accounts decreasereceivables.d. All of these statements are true.
Which of the following refers to the ability of a firm to buy repeatedly from a supplier on trade credit without re-applying for credit? Select one: a. Net terms b. Cash discount c. Open account d. Present value of delayed payment
Which of the following will most likely provide the most assurance concerning theaccuracy balance-related objective for accounts receivable?(1) Vouch amounts in the subsidiary ledger to details on shipping documents.(2) Compare receivable turnover ratios with industry statistics for reasonableness.(3) Inquire about receivables pledged under loan agreements.(4) Assess the allowance for uncollectible accounts for reasonableness
If a company usually sells its accounts receivables, it recorda any factoring commissions as a(n) a. Loss b. Expense c. Receivable d. Liability
Which one of the following statements is true? a. When a company uses a subsidiary ledger, the balance in the control account, Accounts Receivable, shows only the amount the company expects to collect from the accounts receivable, net of any expected uncollectible accounts. b. An accounts receivable subsidiary ledger represents amounts due to vendors and suppliers. c. The balance in the control account, Accounts Receivable, should be equal to the sum of the balances in the subsidiary ledger for accounts receivable. d. A subsidiary ledger takes the place of the control account for some companies.
TRUE OR FALSE?The debit balances in suppliers' accounts should be netted against accounts payable.