Question 1

The test of details of balances procedure that requires the auditor to recalculate accrued interest will satisfy the audit objective of

Accepted Answer

A)  existence. 
B)  completeness. 
C)  classification. 
D)  accuracy. 
A)  existence. 
B)  completeness. 
C)  classification. 
D)  accuracy.

Question 2

The tests of details of balances procedure that requires the auditor to trace the totals of the notes payable list to the general ledger satisfies the objective of

Accepted Answer

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

Question 3

The tests of details of balances procedure that requires the auditor to examine corporate minutes for loan approval would satisfy the audit objective of

Accepted Answer

A)  classification. 
B)  existence. 
C)  completeness. 
D)  accuracy. 
A)  classification. 
B)  existence. 
C)  completeness. 
D)  accuracy.

Question 4

Notes payable that have been repaid in full should be

Accepted Answer

A)  destroyed so that they will not be paid again inadvertently. 
B)  cancelled and destroyed. 
C)  cancelled and returned to the creditor. 
D)  cancelled and retained by an authorized company official. 
A)  destroyed so that they will not be paid again inadvertently. 
B)  cancelled and destroyed. 
C)  cancelled and returned to the creditor. 
D)  cancelled and retained by an authorized company official.

Question 5

Discuss the overall objectives of the audit of notes payable.

Accepted Answer

The overall objectives of the audit of n

Question 6

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 7

During the course of an audit, a public accountant observes that the recorded interest expense seems to be excessive in relation to the balance in the long-term debt account. This observation could lead the auditor to suspect that

Accepted Answer

A)  long-term debt is understated. 
B)  discount on bonds payable is overstated. 
C)  long-term debt is overstated. 
D)  premium on bonds payable is understated. 
A)  long-term debt is understated. 
B)  discount on bonds payable is overstated. 
C)  long-term debt is overstated. 
D)  premium on bonds payable is understated.

Question 8

If actual interest expense is materially larger than the auditor's independent estimate, one possible cause could be

Accepted Answer

A)  interest payments on unrecorded notes payable. 
B)  omitted payments of interest (i.e., underpayments). 
C)  interest payments recorded at the wrong (lower) interest rate. 
D)  notes payable that were set up incorrectly as short-term notes. 
A)  interest payments on unrecorded notes payable. 
B)  omitted payments of interest (i.e., underpayments). 
C)  interest payments recorded at the wrong (lower) interest rate. 
D)  notes payable that were set up incorrectly as short-term notes.

Question 9

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

Accepted Answer

1.The internal controls over capital sto

Question 10

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 11

When the auditor examines the board of directors' minutes for dividends declared, the auditor should be alert to the possibility of unrecorded dividends declared, particularly shortly before the balance sheet date. Which audit assertion does this address?

Accepted Answer

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

Question 12

State the four audit concerns for capital stock and describe how the auditor typically verifies each of these areas.

Accepted Answer

The four most important audit objectives

Question 13

Discuss the four key controls over notes payable.

Accepted Answer

The four key controls over notes payable

Question 14

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 15

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 16

The audit procedure that requires the auditor to examine notes, minutes, and bank confirmations for restrictions is performed to satisfy the audit objective of

Accepted Answer

A)  existence. 
B)  completeness. 
C)  accuracy. 
D)  presentation and disclosure. 
A)  existence. 
B)  completeness. 
C)  accuracy. 
D)  presentation and disclosure.

Question 17

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 18

Identify three analytical procedures commonly performed for notes payable.

Accepted Answer

Some possible analytical procedures for

Question 19

The tests of details of balances procedure that requires the auditor to examine notes paid after year-end to determine whether they were liabilities at the balance sheet date is an attempt to satisfy the audit objective of

Accepted Answer

A)  existence. 
B)  completeness. 
C)  accuracy. 
D)  classification. 
A)  existence. 
B)  completeness. 
C)  accuracy. 
D)  classification.

Question 20

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

The test of details of balances procedure that requires the auditor to recalculate accrued interest will satisfy the audit objective of

The tests of details of balances procedure that requires the auditor to trace the totals of the notes payable list to the general ledger satisfies the objective of

The tests of details of balances procedure that requires the auditor to examine corporate minutes for loan approval would satisfy the audit objective of

Notes payable that have been repaid in full should be

Discuss the overall objectives of the audit of notes payable.

A note payable is

During the course of an audit, a public accountant observes that the recorded interest expense seems to be excessive in relation to the balance in the long-term debt account. This observation could lead the auditor to suspect that

If actual interest expense is materially larger than the auditor's independent estimate, one possible cause could be

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

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

When the auditor examines the board of directors' minutes for dividends declared, the auditor should be alert to the possibility of unrecorded dividends declared, particularly shortly before the balance sheet date. Which audit assertion does this address?

State the four audit concerns for capital stock and describe how the auditor typically verifies each of these areas.

Discuss the four key controls over notes payable.

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 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.

The audit procedure that requires the auditor to examine notes, minutes, and bank confirmations for restrictions is performed to satisfy the audit objective of

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

Identify three analytical procedures commonly performed for notes payable.

The tests of details of balances procedure that requires the auditor to examine notes paid after year-end to determine whether they were liabilities at the balance sheet date is an attempt to satisfy the audit objective of

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Legal Liability

Professional Judgment and Ethics

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Materiality and Risk

Internal Controls and Control Risk

Audit Evidence

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

The test of details of balances procedure that requires the auditor to recalculate accrued interest will satisfy the audit objective of

The tests of details of balances procedure that requires the auditor to trace the totals of the notes payable list to the general ledger satisfies the objective of

The tests of details of balances procedure that requires the auditor to examine corporate minutes for loan approval would satisfy the audit objective of

Notes payable that have been repaid in full should be

Discuss the overall objectives of the audit of notes payable.

A note payable is

During the course of an audit, a public accountant observes that the recorded interest expense seems to be excessive in relation to the balance in the long-term debt account. This observation could lead the auditor to suspect that

If actual interest expense is materially larger than the auditor's independent estimate, one possible cause could be

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

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

When the auditor examines the board of directors' minutes for dividends declared, the auditor should be alert to the possibility of unrecorded dividends declared, particularly shortly before the balance sheet date. Which audit assertion does this address?

State the four audit concerns for capital stock and describe how the auditor typically verifies each of these areas.

Discuss the four key controls over notes payable.

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 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.

The audit procedure that requires the auditor to examine notes, minutes, and bank confirmations for restrictions is performed to satisfy the audit objective of

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

Identify three analytical procedures commonly performed for notes payable.

The tests of details of balances procedure that requires the auditor to examine notes paid after year-end to determine whether they were liabilities at the balance sheet date is an attempt to satisfy the audit objective of

The Demand for Audit and Other Assurance Services

The Public Accounting Profession and Audit Quality

Legal Liability

Professional Judgment and Ethics

Audit Responsibilities and Objectives

Client Acceptance and Planning the Audit

Materiality and Risk

Internal Controls and Control Risk

Audit Evidence

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