Question

An auditor usually tests the reasonableness of dividend income from investments in publicly-held companies by computing the amounts that should have been received by referring to

A. Dividend record books produced by investment advisory services
B. Stock indentures published by corporate transfer agents
C. Stock ledgers maintained by independent registrars
D. Annual audited financial statements issued by the investee companies

Answer 1

An auditor verifies the reasonableness of dividend income from investments by using dividend record books produced by investment advisory services to ensure reported income matches actual distributions.

Step-by-step explanation:

An auditor tests the reasonableness of dividend income from investments in publicly-held companies by verifying if the dividends reported are accurate based on what should have been received. The most reliable source for this would be A. Dividend record books produced by investment advisory services, as they are dedicated to tracking and compiling detailed records of dividend payments made by publicly-held companies. Verifying against such a record ensures that the dividend income reported by a company is in line with actual dividend distributions.