Exam 22: Audit of the Capital Acquisition and Repayment Cycle

Few large companies employ stock transfer agents, but small companies commonly do so.

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

Which of the following audit tests would provide evidence regarding the balance-related audit objective of existence for an audit of notes payable?

Which of the following would generally not need to be approved by the board of directors?

The two most important balance related objectives in notes payable are:

Responsibility for the issuance of new notes payable would normally be vested in the:

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

The audit procedure "Foot the notes payable list and trace the totals to the general ledger" is performed when verifying the accuracy objective for notes payable.

When conducting the audit of stockholders' equity it is normal practice to verify all capital stock transactions:

An auditor is determining whether an issuance of notes payable for cash was correctly recorded.Her best course of action would be to:

Identify three analytical procedures commonly performed for notes payable.

The audit objective that requires the auditor to determine that notes payable on the notes payable schedule are properly classified can be tested by performing the procedure to:

When there are not numerous transactions involving notes payable during the year, the normal starting point for the audit of notes payable is:

One unique characteristic of the capital acquisition and repayment cycle is that relatively few transactions affect the account balances, but each transaction is often highly material in amount.

The audit objective to determine that notes payable in the schedule actually exist is verified by the test of details of balances procedure to:

The balance-related audit objective realizable value is not applicable when auditing notes payable.

In auditing debits and credits to retained earnings, OTHER than net income and dividends, the auditors first concern is:

When a company maintains its own records of stock transactions and outstanding stock, internal controls must be adequate to ensure that:

Notes payable are generally for a period of sixty days or less.

State the four most important audit objectives for capital stock and describe how the auditor typically verifies each of the four objectives.