Question 1

A note payable is

Accepted Answer

A) a long-term account payable. 
B) a legal obligation to a creditor secured by assets. 
C) an unsecured legal obligation to a creditor. 
D) a legal obligation to a creditor that may be unsecured or secured by assets. 
A) a long-term account payable. 
B) a legal obligation to a creditor secured by assets. 
C) an unsecured legal obligation to a creditor. 
D) a legal obligation to a creditor that may be unsecured or secured by assets.

Question 2

Caroline is performing the audit of the capital acquisition and repayment cycle.She is currently auditing the payments of interest made during the year.The proper documentation that Caroline should use as supporting evidence of the payment is

Accepted Answer

A) a copy of the note. 
B) a bank reconciliation. 
C) documentation of her inquiries with management. 
D) the notes payable sub-ledger. 
A) a copy of the note. 
B) a bank reconciliation. 
C) documentation of her inquiries with management. 
D) the notes payable sub-ledger.

Question 3

Presentation and disclosure are important because acceptable financial reporting frameworks require that footnotes adequately describe the terms of notes payable outstanding and the assets pledged as collateral for the loans.Which assertion does this relate to?

Accepted Answer

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

Question 4

Identify three analytical procedures commonly performed for notes payable.

Accepted Answer

Some possible analytical procedures for

Question 5

Discuss the internal controls related to owners' equity that are of concern to the auditor.

Accepted Answer

•Proper authorization of transactions.Ma

Question 6

When a dividend is declared by the board,the source for determining who should receive dividend cheques is the

Accepted Answer

A) shareholders' capital stock register or master file. 
B) stock certificate books. 
C) common stock account in the general ledger. 
D) corporate directory. 
A) shareholders' capital stock register or master file. 
B) stock certificate books. 
C) common stock account in the general ledger. 
D) corporate directory.

Question 7

State the audit objectives while testing dividends-related transactions.

Accepted Answer

The audit objectives related to dividend

Question 8

The auditor recomputed the dividend declaration amount by multiplying the declared dividend per share by the number of shares outstanding.Which audit assertion is this associated with?

Accepted Answer

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

Question 9

The normal audit approach for the audit of bonds issued is to

Accepted Answer

A) examine transactions that occurred near the year-end date only. 
B) verify each transaction taking place in the cycle for the entire year. 
C) select a statistical sample of transactions throughout the year. 
D) rely on controls rather than conducting substantive tests. 
A) examine transactions that occurred near the year-end date only. 
B) verify each transaction taking place in the cycle for the entire year. 
C) select a statistical sample of transactions throughout the year. 
D) rely on controls rather than conducting substantive tests.

Question 10

Tests of details for notes payable interest expense and accrued interest can frequently be eliminated when

Accepted Answer

A) tests of controls are conducted over authorization and recording procedures. 
B) notes are issued by a person independent of the accounting department. 
C) the notes payable schedule indicates that all notes have been repaid. 
D) results of analytical review are favourable. 
A) tests of controls are conducted over authorization and recording procedures. 
B) notes are issued by a person independent of the accounting department. 
C) the notes payable schedule indicates that all notes have been repaid. 
D) results of analytical review are favourable.

Question 11

State the risks of fraud and errors relating to owners' equity and related accounts.

Accepted Answer

The risks of fraud and errors relating t

Question 12

Which of the following audit procedures assists the auditor with testing for completeness?

Accepted Answer

A) Analyze interest expense to uncover a payment to a creditor who is not included in the notes payable schedule. 
B) Examine notes to determine whether the company has obligations for payment. 
C) Examine duplicate copies of notes to determine whether notes were dated on or before the balance sheet date. 
D) Examine the dates on duplicate copies of notes to determine whether all or part of the notes are non-current liabilities. 
A) Analyze interest expense to uncover a payment to a creditor who is not included in the notes payable schedule. 
B) Examine notes to determine whether the company has obligations for payment. 
C) Examine duplicate copies of notes to determine whether notes were dated on or before the balance sheet date. 
D) Examine the dates on duplicate copies of notes to determine whether all or part of the notes are non-current liabilities.

Question 13

Describe the audit procedures and related audit assertions for the audit of dividends.

Accepted Answer

The following are the most important obj

Question 14

Notes payable are easy for companies to correctly value and include in the financial statements.This means that with respect to notes payable,inherent risk is

Accepted Answer

A) low. 
B) medium. 
C) high. 
D) not assessed. 
A) low. 
B) medium. 
C) high. 
D) not assessed.

Question 15

The exclusion of a single transaction of the capital acquisition and repayment cycle could be material in itself.This means that the following audit assertion is a major audit concern:

Accepted Answer

A) completeness. 
B) existence. 
C) accuracy. 
D) rights and obligations. 
A) completeness. 
B) existence. 
C) accuracy. 
D) rights and obligations.

Question 16

Comparison of individual notes payable outstanding with the prior year 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) misstatement 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) misstatement of notes payable,interest expense,or accrued interest

Question 17

State the specific balance-related audit objectives applicable to notes payable and interest and,for each objective,identify one common test of details of balances.

Accepted Answer

Balance-related audit objectives include

Question 18

Responsibility for the issuance of new notes should be vested in the

Accepted Answer

A) board of directors. 
B) accounting department. 
C) accounts payable department. 
D) purchasing department. 
A) board of directors. 
B) accounting department. 
C) accounts payable department. 
D) purchasing department.

Question 19

Discuss the four key controls over notes payable.

Accepted Answer

The four key controls over notes payable

Question 20

As part of the audit,the auditor may examine authorization procedures with respect to the repurchase or redemption of capital stock.In particular,for a public company the auditor would verify that which of the following details have been authorized?

Accepted Answer

A) general ledger accounts affected,dividends included,amount to be paid 
B) type of stock,timing,amount to be paid 
C) individuals from whom repurchase will be permitted,maximum amount 
D) type of stock,amount to be paid,effect upon bond sinking funds 
A) general ledger accounts affected,dividends included,amount to be paid 
B) type of stock,timing,amount to be paid 
C) individuals from whom repurchase will be permitted,maximum amount 
D) type of stock,amount to be paid,effect upon bond sinking funds

A note payable is

Caroline is performing the audit of the capital acquisition and repayment cycle.She is currently auditing the payments of interest made during the year.The proper documentation that Caroline should use as supporting evidence of the payment is

Presentation and disclosure are important because acceptable financial reporting frameworks require that footnotes adequately describe the terms of notes payable outstanding and the assets pledged as collateral for the loans.Which assertion does this relate to?

Identify three analytical procedures commonly performed for notes payable.

Discuss the internal controls related to owners' equity that are of concern to the auditor.

When a dividend is declared by the board,the source for determining who should receive dividend cheques is the

State the audit objectives while testing dividends-related transactions.

The auditor recomputed the dividend declaration amount by multiplying the declared dividend per share by the number of shares outstanding.Which audit assertion is this associated with?

The normal audit approach for the audit of bonds issued is to

Tests of details for notes payable interest expense and accrued interest can frequently be eliminated when

State the risks of fraud and errors relating to owners' equity and related accounts.

Which of the following audit procedures assists the auditor with testing for completeness?

Describe the audit procedures and related audit assertions for the audit of dividends.

Notes payable are easy for companies to correctly value and include in the financial statements.This means that with respect to notes payable,inherent risk is

The exclusion of a single transaction of the capital acquisition and repayment cycle could be material in itself.This means that the following audit assertion is a major audit concern:

Comparison of individual notes payable outstanding with the prior year could detect what type of possible misstatement?

State the specific balance-related audit objectives applicable to notes payable and interest and,for each objective,identify one common test of details of balances.

Responsibility for the issuance of new notes should be vested in the

Discuss the four key controls over notes payable.

As part of the audit,the auditor may examine authorization procedures with respect to the repurchase or redemption of capital stock.In particular,for a public company the auditor would verify that which of the following details have been authorized?

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

A note payable is

Caroline is performing the audit of the capital acquisition and repayment cycle.She is currently auditing the payments of interest made during the year.The proper documentation that Caroline should use as supporting evidence of the payment is

Presentation and disclosure are important because acceptable financial reporting frameworks require that footnotes adequately describe the terms of notes payable outstanding and the assets pledged as collateral for the loans.Which assertion does this relate to?

Identify three analytical procedures commonly performed for notes payable.

Discuss the internal controls related to owners' equity that are of concern to the auditor.

When a dividend is declared by the board,the source for determining who should receive dividend cheques is the

State the audit objectives while testing dividends-related transactions.

The auditor recomputed the dividend declaration amount by multiplying the declared dividend per share by the number of shares outstanding.Which audit assertion is this associated with?

The normal audit approach for the audit of bonds issued is to

Tests of details for notes payable interest expense and accrued interest can frequently be eliminated when

State the risks of fraud and errors relating to owners' equity and related accounts.

Which of the following audit procedures assists the auditor with testing for completeness?

Describe the audit procedures and related audit assertions for the audit of dividends.

Notes payable are easy for companies to correctly value and include in the financial statements.This means that with respect to notes payable,inherent risk is

The exclusion of a single transaction of the capital acquisition and repayment cycle could be material in itself.This means that the following audit assertion is a major audit concern:

Comparison of individual notes payable outstanding with the prior year could detect what type of possible misstatement?

State the specific balance-related audit objectives applicable to notes payable and interest and,for each objective,identify one common test of details of balances.

Responsibility for the issuance of new notes should be vested in the

Discuss the four key controls over notes payable.

As part of the audit,the auditor may examine authorization procedures with respect to the repurchase or redemption of capital stock.In particular,for a public company the auditor would verify that which of the following details have been authorized?

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