Question 1

To determine if notes payable are included in the proper period, the auditor should:

Accepted Answer

A) trace the cash received from the issuance to the accounting records. 
B) examine duplicate copies of notes to determine whether the notes were dated on or before the balance sheet date. 
C) examine duplicate copies of notes for principal and interest rates. 
D) trace the individual notes payable to the master file. 
A) trace the cash received from the issuance to the accounting records. 
B) examine duplicate copies of notes to determine whether the notes were dated on or before the balance sheet date. 
C) examine duplicate copies of notes for principal and interest rates. 
D) trace the individual notes payable to the master file. B

Question 2

Examining the minutes of the board of directors' meetings for proper authorization ordinarily tests the existence objective for capital stock transactions.

Accepted Answer

A) True 
 B)False  False

Question 3

When auditing the capital acquisition and repayment cycle, it is common to verify each transaction taking place in the cycle for the entire year as a part of verifying the balance sheet accounts.

Accepted Answer

A) True 
 B)False  True

Question 4

When a company maintains its own records of stock transactions and capital stock outstanding its internal controls must be adequate to accomplish three objectives.List them below.

Accepted Answer

Actual owners of the stock are recognize

Question 5

The three most important balance-related audit objectives for notes payable are existence, realizable value, and accuracy.

Accepted Answer

A) True 
 B)False

Question 6

You are employing tests of details of balances for notes payable and interest expense.Describe below specific audit procedures you would perform for the balance-related audit objectives of detail tie-in and existence.List at least two for each objective.

Accepted Answer

Detail tie-in: (1)Foot the notes payable

Question 7

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

Accepted Answer

The four characteristics are:
•Relativel

Question 8

The primary audit objectives to focus on when auditing debt are:

Accepted Answer

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

Question 9

Auditing capital stock transactions as part of a merger is challenging because judgment is often involved.

Accepted Answer

A) True 
 B)False

Question 10

The starting point for the audit of notes payable is a schedule of notes payable and accrued interest.Discuss the information typically included in the schedule.

Accepted Answer

The usual schedule includes detailed inf

Question 11

A prior period adjustment may result in a debit or credit to a company's retained earnings account.

Accepted Answer

A) True 
 B)False

Question 12

Most closely held corporations have numerous transactions during the year for capital stock accounts.

Accepted Answer

A) True 
 B)False

Question 13

The audit objective that requires that existing notes payable be included in the notes payable schedule is satisfied by performing which of the following audit procedures?

Accepted Answer

A) Confirm notes payable. 
B) Trace the total of the notes payable schedule to the general ledger. 
C) Review the notes payable schedule to determine whether any are related parties. 
D) Review the bank reconciliation for new notes credited directly to the bank account by the bank. 
A) Confirm notes payable. 
B) Trace the total of the notes payable schedule to the general ledger. 
C) Review the notes payable schedule to determine whether any are related parties. 
D) Review the bank reconciliation for new notes credited directly to the bank account by the bank.

Question 14

Match between columns
                        Premises: A record of the issuance and repurchase of capital stock for the life of the corporation.
An entity that is required to engage an independent registrar.
The cycle that concerns the acquisition of capital resources through interest-bearing debt and owners' equity and repayment of the capital.
An outside person engaged by a corporation to maintain the stockholder records
An outside person engaged by a corporation to make sure that its stock is issued in accordance with capital stock provisions in the corporate charter and authorizations by the board of directors.
The normal starting point for the audit of notes payable; includes detailed information of all transactions related to notes payable that took place during the year.

Accepted Answer

The Answer of Independent registrar and Capital stock certificate book is...

Question 15

Which of the following statements regarding the capital acquisition and repayment cycle is most correct?

Accepted Answer

A) Relatively few transactions affect the cycle, and most are smaller amounts. 
B) Large numbers of transactions affect the cycle, and most are smaller amounts. 
C) Relatively few transactions affect the cycle, and most are highly material. 
D) Large number of transaction affect the cycle, and most are highly material. 
A) Relatively few transactions affect the cycle, and most are smaller amounts. 
B) Large numbers of transactions affect the cycle, and most are smaller amounts. 
C) Relatively few transactions affect the cycle, and most are highly material. 
D) Large number of transaction affect the cycle, and most are highly material.

Question 16

A shareholders' capital stock master file is a record of the issuance and repurchase of capital stock over the life of the corporation.

Accepted Answer

A) True 
 B)False

Question 17

What type of audit test will auditors use when testing to see if the amounts of capital stock transactions are accurately recorded?

Accepted Answer

A)    
B)    
C)    
D)    
A)    
B)    
C)    
D)

Question 18

Which of the following audit objectives is least important in the audit of capital stock and paid-in-capital in excess of par?

Accepted Answer

A) Completeness 
B) Accuracy 
C) Rights and obligations 
D) Presentation and disclosure 
A) Completeness 
B) Accuracy 
C) Rights and obligations 
D) Presentation and disclosure

Question 19

Performance materiality is often set at a(n)________ level for notes payable.

Accepted Answer

A) high 
B) moderate 
C) low 
D) unknown 
A) high 
B) moderate 
C) low 
D) unknown

Question 20

The two most important balance related audit objectives for notes payable are:

Accepted Answer

A) completeness and detail tie-in. 
B) completeness and valuation. 
C) accuracy and valuation. 
D) accuracy and completeness. 
A) completeness and detail tie-in. 
B) completeness and valuation. 
C) accuracy and valuation. 
D) accuracy and completeness.

Exam 22: Audit of the Capital Acquisition and Repayment Cycle

To determine if notes payable are included in the proper period, the auditor should:

Examining the minutes of the board of directors' meetings for proper authorization ordinarily tests the existence objective for capital stock transactions.

When auditing the capital acquisition and repayment cycle, it is common to verify each transaction taking place in the cycle for the entire year as a part of verifying the balance sheet accounts.

When a company maintains its own records of stock transactions and capital stock outstanding its internal controls must be adequate to accomplish three objectives.List them below.

The three most important balance-related audit objectives for notes payable are existence, realizable value, and accuracy.

You are employing tests of details of balances for notes payable and interest expense.Describe below specific audit procedures you would perform for the balance-related audit objectives of detail tie-in and existence.List at least two for each objective.

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

The primary audit objectives to focus on when auditing debt are:

Auditing capital stock transactions as part of a merger is challenging because judgment is often involved.

The starting point for the audit of notes payable is a schedule of notes payable and accrued interest.Discuss the information typically included in the schedule.

A prior period adjustment may result in a debit or credit to a company's retained earnings account.

Most closely held corporations have numerous transactions during the year for capital stock accounts.

The audit objective that requires that existing notes payable be included in the notes payable schedule is satisfied by performing which of the following audit procedures?

Which of the following statements regarding the capital acquisition and repayment cycle is most correct?

A shareholders' capital stock master file is a record of the issuance and repurchase of capital stock over the life of the corporation.

What type of audit test will auditors use when testing to see if the amounts of capital stock transactions are accurately recorded?

Which of the following audit objectives is least important in the audit of capital stock and paid-in-capital in excess of par?

Performance materiality is often set at a(n)________ level for notes payable.

The two most important balance related audit objectives for notes payable are:

The Demand for Audit and Other Assurance Services

The Cpa Profession

Audit Reports

Professional Ethics

Legal Liability

Audit Responsibilities and Objectives

Audit Evidence

Audit Planning and Analytical Procedures

Materiality and Risk

Internal Control, Control Risk, and Section 404 Audits

Fraud Auditing

The Impact of Information Technology on the Audit Process

Overall Audit Strategy and Audit Program

Audit of the Sales and Collection Cycle: Tests of Controls and Substantive Tests of Transactions

Audit Sampling for Tests of Controls and Substantive Tests of Transactions

Completing the Tests in the Sales and Collection Cycle: Accounts Receivable

Audit Sampling for Tests of Details of Balances

Audit of the Acquisition and Payment Cycle: Tests of Controls, Substantive Tests of Transactions, and Accounts Payable

Completing the Tests in the Acquisition and Payment Cycle: Verification of Selected Accounts

Audit of the Payroll and Personnel Cycle

Audit of the Inventory and Warehousing Cycle

Audit of Cash and Financial Instruments

Completing the Audit

Other Assurance Services

Internal and Governmental Financial Auditing and Operational Auditing

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