Question 1

Describe the risks of error and fraud in the debt or equity accounts.

Accepted Answer

The risks of fraud and error for such ac

Question 2

Recalculation of an approximate interest expense using the basis of average interests rates and overall monthly notes payable could detect what type of possible misstatement?

Accepted Answer

A) misstatement of interest expense or accrued interest,or omission of a note payable 
B) omission or misstatement of a note payable 
C) misclassification of a note payable as long-term rather than current 
D) misclassification of notes payable,interest expense,or accrued interest 
A) misstatement of interest expense or accrued interest,or omission of a note payable 
B) omission or misstatement of a note payable 
C) misclassification of a note payable as long-term rather than current 
D) misclassification of notes payable,interest expense,or accrued interest

Question 3

In the audit of the transactions and amounts in the capital acquisitions and repayments cycle,the auditor must ensure that significant legal requirements affecting the financial statements have been properly fulfilled and

Accepted Answer

A) any violations are reported to the relevant provincial securities commissions. 
B) any departures from the agreements are made with management's knowledge and consent. 
C) are adequately disclosed in the financial statements. 
D) must issue a disclaimer if they haven't been fulfilled. 
A) any violations are reported to the relevant provincial securities commissions. 
B) any departures from the agreements are made with management's knowledge and consent. 
C) are adequately disclosed in the financial statements. 
D) must issue a disclaimer if they haven't been fulfilled.

Question 4

Why is it not cost effective to test controls of the notes payable and related accounts?

Accepted Answer

A) There are usually few transactions. 
B) There are usually many transactions. 
C) There are complex transactions. 
D) There are transactions with no risks. 
A) There are usually few transactions. 
B) There are usually many transactions. 
C) There are complex transactions. 
D) There are transactions with no risks.

Question 5

The emphasis in the audit of dividends is on

Accepted Answer

A) ending equity balance. 
B) transactions. 
C) opening dividends payable balance. 
D) confirming the number of shares outstanding. 
A) ending equity balance. 
B) transactions. 
C) opening dividends payable balance. 
D) confirming the number of shares outstanding.

Question 6

There is a direct relationship between the interest and dividend accounts and debt and equity.This means that in the audit of interest-bearing debt,it is desirable to simultaneously verify

Accepted Answer

A) the related dividends declared and dividends payable. 
B) the related interest expense and interest payable. 
C) contracts and commitments that are long-term. 
D) details provided in the board of directors' minutes. 
A) the related dividends declared and dividends payable. 
B) the related interest expense and interest payable. 
C) contracts and commitments that are long-term. 
D) details provided in the board of directors' minutes.

Question 7

A primary concern in determining whether retained earnings is correctly disclosed on the balance sheet is

Accepted Answer

A) correct calculation of the net income or loss for the year. 
B) correct calculation of dividend payments for the year. 
C) whether adjustments to retained earnings have been made correctly. 
D) whether there are any restrictions on the payment of dividends. 
A) correct calculation of the net income or loss for the year. 
B) correct calculation of dividend payments for the year. 
C) whether adjustments to retained earnings have been made correctly. 
D) whether there are any restrictions on the payment of dividends.

Question 8

Which of the following internal controls over notes payable address risks associated with the accuracy,allocation,and completeness audit assertions?

Accepted Answer

A) Renewals or new notes should be approved by the board of directors (as evidenced in the minutes)or by senior management. 
B) Authorized employees should perform independent recalculations of interest and reconciliation of the notes payable balance to the general ledger. 
C) Subsidiary records should be maintained for each note and there should be control over blank and paid notes. 
D) Paid notes should be cancelled and retained under the custody of an authorized official. 
A) Renewals or new notes should be approved by the board of directors (as evidenced in the minutes)or by senior management. 
B) Authorized employees should perform independent recalculations of interest and reconciliation of the notes payable balance to the general ledger. 
C) Subsidiary records should be maintained for each note and there should be control over blank and paid notes. 
D) Paid notes should be cancelled and retained under the custody of an authorized official.

Question 9

One of the reasons the auditor reads debt agreements is to discover whether there are any restrictions on the company,such as restrictions on the payment of dividends.It is important for the auditor to identify such restrictions so that

Accepted Answer

A) corroborative evidence can then be obtained from management. 
B) the auditor can make sure that management is adhering to the restrictions. 
C) the auditor can include the restrictions in the management representation letter. 
D) they can be disclosed in the footnotes of the financial statements. 
A) corroborative evidence can then be obtained from management. 
B) the auditor can make sure that management is adhering to the restrictions. 
C) the auditor can include the restrictions in the management representation letter. 
D) they can be disclosed in the footnotes of the financial statements.

Question 10

The audit objective requiring that existing notes payable are included in the notes payable schedule (completeness)is satisfied by performing the following audit procedure.

Accepted Answer

A) Recalculate accrued interest. 
B) Examine duplicate copies of notes for details. 
C) Review the notes payable schedule to determine whether any are related parties. 
D) Obtain confirmations from creditors who have held notes from the client in the past and are not currently included in the notes payable schedule. 
A) Recalculate accrued interest. 
B) Examine duplicate copies of notes for details. 
C) Review the notes payable schedule to determine whether any are related parties. 
D) Obtain confirmations from creditors who have held notes from the client in the past and are not currently included in the notes payable schedule.

Question 11

What are the factors that increase inherent risks for the accounts within the capital acquisition and repayment cycle?

Accepted Answer

Factors that increase inherent risks for

Question 12

Describe the three objectives of the auditor's examination of owners' equity.

Accepted Answer

1.The internal controls over capital sto

Question 13

The auditor has reconciled the dividend payment amounts disbursed according to the cash disbursements journal to the dividend declared.Which audit assertions is this test associated with?

Accepted Answer

A) valuation and existence 
B) accuracy and valuation 
C) accuracy and completeness 
D) valuation and understandability 
A) valuation and existence 
B) accuracy and valuation 
C) accuracy and completeness 
D) valuation and understandability

Question 14

Discuss the overall objectives of the audit of notes payable.

Accepted Answer

The overall objectives of the audit of n

Question 15

The transfer agent confirmed to the auditor that the company had 2 500 000 shares outstanding at December 31,2019.To have assurance over the accuracy of the dividend payable,the auditor would multiply 2 500 000 by the

Accepted Answer

A) dividend per share declared. 
B) dividend per share paid during the year. 
C) dividend per share as per the articles of incorporation,even if it was not declared during the year. 
D) average dividend for the industry. 
A) dividend per share declared. 
B) dividend per share paid during the year. 
C) dividend per share as per the articles of incorporation,even if it was not declared during the year. 
D) average dividend for the industry.

Question 16

Discuss the four characteristics of the capital acquisition and repayment cycle that make it unique from other cycles.

Accepted Answer

The four characteristics are:
•Relativel

Question 17

Kumar is the internal auditor of Tarragon Inc.Kumar wants to put procedures in place to prevent misstatements in owners' equity and ensure proper record keeping.Kumar has suggested that management implement well-defined policies for preparing stock certificates and recording capital stock transactions.What else should Kumar recommend?

Accepted Answer

A) independent internal verification of information in the records 
B) having all journal entries in the equity account reviewed by the controller 
C) performing a monthly reconciliation of shareholder's equity 
D) reconciling the dividend payments with the bank statement 
A) independent internal verification of information in the records 
B) having all journal entries in the equity account reviewed by the controller 
C) performing a monthly reconciliation of shareholder's equity 
D) reconciling the dividend payments with the bank statement

Question 18

The most important balance-related and presentation and disclosure-related audit objectives for notes payable are

Accepted Answer

A) accuracy,existence,and completeness. 
B) existence,completeness,and valuation. 
C) accuracy,completeness,and understandability. 
D) accuracy,completeness,and valuation. 
A) accuracy,existence,and completeness. 
B) existence,completeness,and valuation. 
C) accuracy,completeness,and understandability. 
D) accuracy,completeness,and valuation.

Question 19

The audit objective to determine that existing notes payable are included in the notes payable schedule (completeness)is accomplished by the following test of balances procedure.

Accepted Answer

A) Examine balance sheet for disclosure details. 
B) Recalculate accrued interest. 
C) Review the bank reconciliation for new notes credited directly to the bank account by the bank. 
D) Examine duplicate copies of notes for principal and interest rates. 
A) Examine balance sheet for disclosure details. 
B) Recalculate accrued interest. 
C) Review the bank reconciliation for new notes credited directly to the bank account by the bank. 
D) Examine duplicate copies of notes for principal and interest rates.

Question 20

What procedure can an auditor use to determine whether notes payable on the notes payable schedule are properly classified?

Accepted Answer

A) Review the notes to determine whether any are with related parties. 
B) Confirm notes payable. 
C) Examine corporate minutes for loan approval. 
D) Examine notes,minutes,and bank confirmations for restrictions. 
A) Review the notes to determine whether any are with related parties. 
B) Confirm notes payable. 
C) Examine corporate minutes for loan approval. 
D) Examine notes,minutes,and bank confirmations for restrictions.

Describe the risks of error and fraud in the debt or equity accounts.

Recalculation of an approximate interest expense using the basis of average interests rates and overall monthly notes payable could detect what type of possible misstatement?

In the audit of the transactions and amounts in the capital acquisitions and repayments cycle,the auditor must ensure that significant legal requirements affecting the financial statements have been properly fulfilled and

Why is it not cost effective to test controls of the notes payable and related accounts?

The emphasis in the audit of dividends is on

There is a direct relationship between the interest and dividend accounts and debt and equity.This means that in the audit of interest-bearing debt,it is desirable to simultaneously verify

A primary concern in determining whether retained earnings is correctly disclosed on the balance sheet is

Which of the following internal controls over notes payable address risks associated with the accuracy,allocation,and completeness audit assertions?

One of the reasons the auditor reads debt agreements is to discover whether there are any restrictions on the company,such as restrictions on the payment of dividends.It is important for the auditor to identify such restrictions so that

The audit objective requiring that existing notes payable are included in the notes payable schedule (completeness)is satisfied by performing the following audit procedure.

What are the factors that increase inherent risks for the accounts within the capital acquisition and repayment cycle?

Describe the three objectives of the auditor's examination of owners' equity.

The auditor has reconciled the dividend payment amounts disbursed according to the cash disbursements journal to the dividend declared.Which audit assertions is this test associated with?

Discuss the overall objectives of the audit of notes payable.

The transfer agent confirmed to the auditor that the company had 2 500 000 shares outstanding at December 31,2019.To have assurance over the accuracy of the dividend payable,the auditor would multiply 2 500 000 by the

Discuss the four characteristics of the capital acquisition and repayment cycle that make it unique from other cycles.

The most important balance-related and presentation and disclosure-related audit objectives for notes payable are

The audit objective to determine that existing notes payable are included in the notes payable schedule (completeness)is accomplished by the following test of balances procedure.

What procedure can an auditor use to determine whether notes payable on the notes payable schedule are properly classified?

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters

Exam 16: Audit of the Capital Acquisition and Repayment Cycle

Describe the risks of error and fraud in the debt or equity accounts.

Recalculation of an approximate interest expense using the basis of average interests rates and overall monthly notes payable could detect what type of possible misstatement?

In the audit of the transactions and amounts in the capital acquisitions and repayments cycle,the auditor must ensure that significant legal requirements affecting the financial statements have been properly fulfilled and

Why is it not cost effective to test controls of the notes payable and related accounts?

The emphasis in the audit of dividends is on

There is a direct relationship between the interest and dividend accounts and debt and equity.This means that in the audit of interest-bearing debt,it is desirable to simultaneously verify

A primary concern in determining whether retained earnings is correctly disclosed on the balance sheet is

Which of the following internal controls over notes payable address risks associated with the accuracy,allocation,and completeness audit assertions?

One of the reasons the auditor reads debt agreements is to discover whether there are any restrictions on the company,such as restrictions on the payment of dividends.It is important for the auditor to identify such restrictions so that

The audit objective requiring that existing notes payable are included in the notes payable schedule (completeness)is satisfied by performing the following audit procedure.

What are the factors that increase inherent risks for the accounts within the capital acquisition and repayment cycle?

Describe the three objectives of the auditor's examination of owners' equity.

The auditor has reconciled the dividend payment amounts disbursed according to the cash disbursements journal to the dividend declared.Which audit assertions is this test associated with?

Discuss the overall objectives of the audit of notes payable.

The transfer agent confirmed to the auditor that the company had 2 500 000 shares outstanding at December 31,2019.To have assurance over the accuracy of the dividend payable,the auditor would multiply 2 500 000 by the

Discuss the four characteristics of the capital acquisition and repayment cycle that make it unique from other cycles.

The most important balance-related and presentation and disclosure-related audit objectives for notes payable are

The audit objective to determine that existing notes payable are included in the notes payable schedule (completeness)is accomplished by the following test of balances procedure.

What procedure can an auditor use to determine whether notes payable on the notes payable schedule are properly classified?

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Professional Ethics and Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Client Acceptance,Planning,and Materiality

Assessing the Risk of Material Misstatement

Internal Control and COSO Framework

Assessing Control Risk and Designing Test of Controls

Develop Risk Response: Audit Strategy and Audit Program

Audit Sampling Concepts

Audit of the Revenue Cycle

Audit of the Acquisition and Payment Cycle

Audit of the Inventory and Distribution Cycle

Audit of the Human Resources and Payroll Cycle

Audit of Cash Balances

Completing the Audit

Audit Reports on Financial Statements

Other Assurance and Nonassurance Services

Filters