Exam 16: Audit of the Capital Acquisition and Repayment Cycle

Comparison of the total balance in notes payable, interest expense, and accrued interest with these accounts in the prior year could detect what type of possible misstatement?

(Multiple Choice)

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Question 41

The audit objective to determine that notes payable and accrued interest on the notes payable schedule are accurate is accomplished by which of the following test of balances procedure?

(Multiple Choice)

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Question 42

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

(Multiple Choice)

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Question 43

It is normal practice to verify all capital stock transactions

(Multiple Choice)

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Question 44

If a company employs a capital stock registrar and/or transfer agent, the registrar or agent (or both) should be requested to confirm directly to the auditor the number of shares of each class of stock

(Multiple Choice)

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Question 45

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?

(Multiple Choice)

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Question 46

As part of the audit of dividends, the auditor would verify whether the payment was made to the shareholders who owned the stock at the dividend record date. Which of the following audit tests assists with this objective?

(Multiple Choice)

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Question 47

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.

(Multiple Choice)

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Question 48

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

(Multiple Choice)

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Question 49

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

(Essay)

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Question 50

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

(Multiple Choice)

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Question 51

When the auditor examines the minutes of board of directors' meetings for the amount of the dividend per share and the dividend date, the auditor is checking for

(Multiple Choice)

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Question 52

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

(Multiple Choice)

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Question 53

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

(Multiple Choice)

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Question 54

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:

(Multiple Choice)

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Question 55

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

(Multiple Choice)

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Question 56

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

(Multiple Choice)

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Question 57

First Global is a public company. You are currently performing the audit of the owners' equity section and you have been asked to write a short memo about the control weaknesses you have identified and the potential risk attached to each weakness. First Global has been a public company since March of the current year, when it underwent its IPO. The corporation has been implementing various controls with regards to keeping records of the company, but it is still a growing company. Sasha, the equity accountant, has been having a tough time learning all the new regulations, keeping the records up to date, and ensuring that the dividend payments are made on time. First Global issued two classes of shares in its IPO. Class A shares with 10 votes were issued to the Truman family so they could retain control of the company and Class B shares with 1 vote each were issued to the general public. When you reviewed the accounting records, you noticed that they contained only one account for capital stocks. What control weaknesses are evident at First Global and what are their implications?

(Essay)

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Question 58

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

(Multiple Choice)

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Question 59

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

(Multiple Choice)

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Question 60

Showing 41 - 60 of 66

Comparison of the total balance in notes payable, interest expense, and accrued interest with these accounts in the prior year could detect what type of possible misstatement?

The audit objective to determine that notes payable and accrued interest on the notes payable schedule are accurate is accomplished by which of the following test of balances procedure?

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

It is normal practice to verify all capital stock transactions

If a company employs a capital stock registrar and/or transfer agent, the registrar or agent (or both) should be requested to confirm directly to the auditor the number of shares of each class of stock

As part of the audit of dividends, the auditor would verify whether the payment was made to the shareholders who owned the stock at the dividend record date. Which of the following audit tests assists with this objective?

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

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

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

When the auditor examines the minutes of board of directors' meetings for the amount of the dividend per share and the dividend date, the auditor is checking for

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

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

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:

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

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

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

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

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

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