When Auditing Prepaid Insurance, an Auditor Discovers That the Original

Multiple Choice

When auditing prepaid insurance, an auditor discovers that the original insurance policy on plant equipment is not available for inspection. The policy's absence most likely indicates the possibility of a (an) :

A) Insurance premium due but not recorded.
B) Deficiency in the coinsurance provision.
C) Lien on the plant equipment.
D) Understatement of insurance expense.