Question

Jones was engaged to examine the financial statements of Virginia Corporation for the year ended June 30. Having completed an examination of the investment securities, which of the following is the best method of verifying the accuracy of recorded dividend income?

A. Tracing recorded dividend income to cash receipts records and validated deposit slips
B. Utilizing analytical procedures and statistical sampling
C. Comparing recorded dividends with amounts appearing on federal information forms 1099
D. Comparing recorded dividends with a standard financial reporting service's record of dividends

Answer 1

The best method to verify recorded dividend income for a corporation is by comparing recorded dividends with a standard financial reporting service's record, as it provides independent verification of expected dividend distributions based on the corporation's holdings.

Step-by-step explanation:

The student has asked how to verify the accuracy of recorded dividend income for a corporation. The best method to verify the accuracy of the recorded dividend income is option D: Comparing recorded dividends with a standard financial reporting service's record of dividends.

Option A, which includes tracing recorded dividend income to cash receipts records and validated deposit slips, is also essential as it provides evidence that the dividends were actually received. However, it does not necessarily verify if dividends were recorded in the correct amounts.