Exam 16: Audit of the Capital Acquisition and Repayment Cycle

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 that have been repaid in full should be

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

Explain why the auditor's verification of owners' equity is more complex for publicly-held corporations than closely-held corporations.

An audit procedure that is part of the audit of notes payable is the review of the permanent audit working paper files to determine if there are restrictions on the payment of dividends in bond indenture agreements or preferred share provisions. Which presentation and disclosure audit assertion is this associated with?

The normal starting point for the audit of notes payable is

Proper authorization for the issuance of notes payable requires that

Discuss the four key controls over notes payable.

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

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

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

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

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?

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

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

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?

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

For publicly held corporations, the verification of owners' equity is more complex due to the

Discuss the overall objectives of the audit of notes payable.