Exam 15: Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders' Equity, and Income Statement Accounts

In connection with the examination of bonds payable, an auditor would expect to find in a bond agreement:

The auditor is concerned with establishing that dividends are paid to stockholders of the entity owning stock as of the:

Match each of the following controls with the assertion for long-term debt that it supports. -Any significant debt commitments are approved by the board of directors or delegated executives

During the year under audit, a company has completed a private placement of a substantial amount of bonds. Which of the following would the auditor use to test the completeness assertion in the auditor's program for the audit of bonds payable?

The auditor gathers evidence about dividends that are declared and paid primarily because of:

Several years ago, Conway, Inc., secured a conventional real estate mortgage loan. Which of the following audit procedures would least likely be performed by an auditor examining the mortgage balance?

A company issued bonds for cash during the year under audit. To ascertain that this transaction was properly recorded, the auditor's best course of action is to:

The occurrence assertion is being tested when the auditor vouches stock repurchases to the canceled stock certificates.

Many of Granada Corporation's convertible bond holders have converted their bonds into stock during the year under examination. The independent auditor should review Granada Corporation's statement of cash flows to ascertain that it shows:

Match the balance sheet account with the income statement account that is typically audited at the same time. -Bonds Payable

Give an example of how the audit of income statement accounts could be affected by results of audit work done in other areas of the audit.

Overall analysis of income statement accounts may bring to light errors, omissions, and inconsistencies not disclosed in the overall analysis of balance sheet accounts. The income statement analysis can best be accomplished by comparing:

Identify the three major types of transactions that occur in stockholders' equity.

If recorded interest expense is higher than the auditor's expectation calculated using recorded debt, all of the following are potential explanations except that:

An audit of stockholders' equity ordinarily should include:

The repurchase of stock includes the reacquisition of stock (treasury stock), but not the retirement of stock.

An audit program for the examination of the retained earnings account should include a step that requires verification of the:

During the course of an audit, a CPA observes that the recorded interest expense seems to be excessive in relation to the balance in the long-term debt account. This observation could lead the auditor to suspect that:

During an examination of a public company, the auditor should obtain written confirmation regarding bond transactions from the:

Match each of the following controls with the assertion for long-term debt that it supports. -The portion of long-term debt due in the next year is classified as a short-term liability