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Q:
Evidence comes in several types and has different degrees of reliability.
Subsequent are some statements that compare several types of evidence.
a. A bank confirmation versus observation of the segregation of duties between cash receipts and recording payment in the accounts receivable subsidiary ledger.
b. An auditor's re-calculation of depreciation versus inspection of raw material requisitions.
c. A bank statement added in the client's records versus shipping documents.
d. Physical inspection of common stock certificates held for investment against physical examination of inventory components for a personal computer.
Required:
For every situation, show whether the first or second type of evidence is more reliable. Give a rationale for your choice.
Intermediate has 2,000 stock options outstanding for the whole year. Each option will be exchanged for one share of common stock at an exercise price of $20.
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