Question 1

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

Accepted Answer

•Proper authorization of transactions.Ma

Question 2

Proper authorization for the issuance of notes payable requires that

Accepted Answer

A)  whenever notes are renewed (refinanced), they should be subject to the same authorization procedures as used when they were first issued. 
B)  responsibility for authorizing notes should lie with the manager who will receive the benefits of the loan. 
C)  responsibility for authorization should lie with the treasurer's function, since the treasurer's department will receive the cash generated. 
D)  responsibility for authorization should lie with the manager who must generate the revenue to repay the loan. 
A)  whenever notes are renewed (refinanced), they should be subject to the same authorization procedures as used when they were first issued. 
B)  responsibility for authorizing notes should lie with the manager who will receive the benefits of the loan. 
C)  responsibility for authorization should lie with the treasurer's function, since the treasurer's department will receive the cash generated. 
D)  responsibility for authorization should lie with the manager who must generate the revenue to repay the loan.

Question 3

The amount of time spent verifying owners' equity is frequently minimal for closely-held corporations because

Accepted Answer

A)  these companies are so small that it is not necessary to audit the capital section. 
B)  the few owners all have access to the books, so the auditor spends more time on accounts like liabilities, which affect outsiders. 
C)  there are few, if any, transactions during the year for the capital stock accounts, except for earnings and dividends. 
D)  there is no public interest in these companies. 
A)  these companies are so small that it is not necessary to audit the capital section. 
B)  the few owners all have access to the books, so the auditor spends more time on accounts like liabilities, which affect outsiders. 
C)  there are few, if any, transactions during the year for the capital stock accounts, except for earnings and dividends. 
D)  there is no public interest in these companies.

Question 4

The audit objective to determine that notes payable in the schedule exist is verified by the tests of balances procedure to

Accepted Answer

A)  foot the notes payable list. 
B)  confirm notes payable. 
C)  recalculate interest expense. 
D)  examine the balance sheet for proper disclosure of noncurrent portions. 
A)  foot the notes payable list. 
B)  confirm notes payable. 
C)  recalculate interest expense. 
D)  examine the balance sheet for proper disclosure of noncurrent portions.

Question 5

Two of the audit objectives for notes payable are important because a misstatement could be material even if one note is omitted or incorrect. Which assertions are they?

Accepted Answer

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

Question 6

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.

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

Proper authorization for the issuance of notes payable requires that

The amount of time spent verifying owners' equity is frequently minimal for closely-held corporations because

The audit objective to determine that notes payable in the schedule exist is verified by the tests of balances procedure to

Two of the audit objectives for notes payable are important because a misstatement could be material even if one note is omitted or incorrect. Which assertions are they?

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 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

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Exam 16: Audit of the Capital Acquisition and Repayment Cycle

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

Proper authorization for the issuance of notes payable requires that

The amount of time spent verifying owners' equity is frequently minimal for closely-held corporations because

The audit objective to determine that notes payable in the schedule exist is verified by the tests of balances procedure to

Two of the audit objectives for notes payable are important because a misstatement could be material even if one note is omitted or incorrect. Which assertions are they?

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 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