Question 1

Auditors count investment securities held by the client primarily to test the ASB balance assertion of

Accepted Answer

A)  existence. 
B)  rights and obligations. 
C)  completeness. 
D)  valuation. 
A)  existence. 
B)  rights and obligations. 
C)  completeness. 
D)  valuation.

Question 2

Capital stock may be subject to _____________________________ when independent registrars and transfer agents are employed.
Question also found in study guide

Accepted Answer

The answer of Capital stock may be subject to _____________________________...

Question 3

The typical business activity in the financing and investment cycle that requires an accounting entry is

Accepted Answer

A)  short- and long-term forecast. 
B)  meeting with investment bankers. 
C)  proposal to board of directors for investing excess monies. 
D)  investment of excess funds in temporary or long-term securities. 
A)  short- and long-term forecast. 
B)  meeting with investment bankers. 
C)  proposal to board of directors for investing excess monies. 
D)  investment of excess funds in temporary or long-term securities.

Question 4

In confirming with an outside agent,such as a financial institution,that the agent is holding investment securities in the client's name,an auditor most likely gathers evidence in support of ASB balance assertion of existence and

Accepted Answer

A)  valuation. 
B)  rights and obligations. 
C)  completeness. 
D)  accuracy. 
A)  valuation. 
B)  rights and obligations. 
C)  completeness. 
D)  accuracy.

Question 5

In Case 10.4 (No Treasure in This Treasure Planet),Disney overvalued net assets by capitalizing unrecoverable production costs.The lesson for the auditors in this case was to

Accepted Answer

A)  always recalculate the client's figures regardless of how simple they appear. 
B)  maintain professional skepticism when evaluating clients' estimates. 
C)  always look into the background of the client before accepting an engagement. 
D)  none of the above. 
A)  always recalculate the client's figures regardless of how simple they appear. 
B)  maintain professional skepticism when evaluating clients' estimates. 
C)  always look into the background of the client before accepting an engagement. 
D)  none of the above.

Question 6

If the auditors discover that the carrying amount of a client's investments is overstated because of a loss in value that is other than a temporary decline in market value,they should insist that

Accepted Answer

A)  the approximate market value of the investments be shown in parentheses on the face of the balance sheet. 
B)  the investments be classified as long term for balance-sheet purposes with full disclosure in the footnotes. 
C)  the loss in value be recognized in the financial statements. 
D)  the equity section of the balance sheet separately show a charge equal to the amount of the loss. 
A)  the approximate market value of the investments be shown in parentheses on the face of the balance sheet. 
B)  the investments be classified as long term for balance-sheet purposes with full disclosure in the footnotes. 
C)  the loss in value be recognized in the financial statements. 
D)  the equity section of the balance sheet separately show a charge equal to the amount of the loss.

Question 7

The confirmation of notes payable to banks may use the _____________________________________ confirmation.
Question also found in study guide

Accepted Answer

The answer of The confirmation of notes payable to banks...

Question 8

Which of the following would not be a typical feature of management's control over the production of estimates?

Accepted Answer

A)  Accumulation of relevant, sufficient, and reliable data. 
B)  Preparation of estimates by qualified personnel. 
C)  Review by the independent auditor. 
D)  Consideration by management of whether particular accounting estimates are consistent with the company's operational plans. 
A)  Accumulation of relevant, sufficient, and reliable data. 
B)  Preparation of estimates by qualified personnel. 
C)  Review by the independent auditor. 
D)  Consideration by management of whether particular accounting estimates are consistent with the company's operational plans.

Question 9

When stock is used in exchange for tangible assets,the auditor should inspect the assets to ensure the assets exist.

Accepted Answer

A) True 
 B)False

Question 10

When circumstances call for extended procedures,information on outstanding stock may be ________________________________________________.
Question also found in study guide

Accepted Answer

confirmed

Question 11

Which of the following management assertions for long-term liabilities is related to the ASB balance assertion of completeness?

Accepted Answer

A)  All material long-term liabilities are recorded. 
B)  New long-term liabilities and debt extinguishments are properly authorized. 
C)  Terms, conditions, and restrictions relating to noncurrent debt are adequately disclosed. 
D)  Disclosures of maturities for the next five years are accurate and adequate. 
A)  All material long-term liabilities are recorded. 
B)  New long-term liabilities and debt extinguishments are properly authorized. 
C)  Terms, conditions, and restrictions relating to noncurrent debt are adequately disclosed. 
D)  Disclosures of maturities for the next five years are accurate and adequate.

Question 12

Mike is the controller at Huskie Supply Company.Huskie Supply has an investment account with DT National Brokerage.Mike is authorized to call the broker and initiate trades on behalf of the company.Mike's son goes to MEU (Most Expensive University)and Mike has a CD with the money for this year's tuition.MEU changed the tuition due date such that the tuition came due 30 days before Mike's CD matured.Mike would lose a large amount of interest if he cashed in the CD early,and a loan from the bank was not possible (Mike is already over extended),and interest on a credit card advance would be 28%.
Mike authorized DT National Brokerage to sell one of the company's investments and send the check to his attention at the company.Mike paid the tuition and 30 days later,when the CD came due Mike repurchased the investment with the broker.In fact,the stock had dropped $3 and mike made a profit of $900.
A)Define the internal control weakness that allowed the situation to exist - if any;
B)One (and only one)internal controls that should be in place to prevent or detect the problem; and.
C)One (and only one)test of control audit procedure.
D)One (and only one)substantive audit procedure that may detect the situation described.

Accepted Answer

Format your answer in the following mann

Question 13

What is a compensating control? Describe what type of compensating controls might be implemented in the finance and investment cycle.

Accepted Answer

A compensating control is a control acti

Question 14

In auditing for unrecorded long-term bonds payable,an audit team most likely will

Accepted Answer

A)  perform analytical procedures on the bond premium and discount accounts. 
B)  examine documentation of assets purchased with bond proceeds for liens. 
C)  compare interest expense with the bond payable amount for reasonableness. 
D)  confirm the existence of individual bondholders at year-end. 
A)  perform analytical procedures on the bond premium and discount accounts. 
B)  examine documentation of assets purchased with bond proceeds for liens. 
C)  compare interest expense with the bond payable amount for reasonableness. 
D)  confirm the existence of individual bondholders at year-end.

Question 15

Loan covenants are used for which of the following reasons?

Accepted Answer

A)  To protect the lender from the borrower substantially weakening the borrower's financial position. 
B)  To protect the borrower from the lender calling the loan early. 
C)  To protect the auditors from false information by the borrower. 
D)  To protect shareholders from management taking on too much debt. 
A)  To protect the lender from the borrower substantially weakening the borrower's financial position. 
B)  To protect the borrower from the lender calling the loan early. 
C)  To protect the auditors from false information by the borrower. 
D)  To protect shareholders from management taking on too much debt.

Question 16

Which of the following is not an estimate required in the finance and investment cycle?

Accepted Answer

A)  Actuarial assumptions for pension accruals. 
B)  Residual values for leases. 
C)  Stated market value of publicly traded stocks. 
D)  All the above are estimates. 
A)  Actuarial assumptions for pension accruals. 
B)  Residual values for leases. 
C)  Stated market value of publicly traded stocks. 
D)  All the above are estimates.

Auditors count investment securities held by the client primarily to test the ASB balance assertion of

Capital stock may be subject to _____________________________ when independent registrars and transfer agents are employed. Question also found in study guide

The typical business activity in the financing and investment cycle that requires an accounting entry is

In confirming with an outside agent,such as a financial institution,that the agent is holding investment securities in the client's name,an auditor most likely gathers evidence in support of ASB balance assertion of existence and

In Case 10.4 (No Treasure in This Treasure Planet),Disney overvalued net assets by capitalizing unrecoverable production costs.The lesson for the auditors in this case was to

If the auditors discover that the carrying amount of a client's investments is overstated because of a loss in value that is other than a temporary decline in market value,they should insist that

The confirmation of notes payable to banks may use the _____________________________________ confirmation. Question also found in study guide

Which of the following would not be a typical feature of management's control over the production of estimates?

When stock is used in exchange for tangible assets,the auditor should inspect the assets to ensure the assets exist.

When circumstances call for extended procedures,information on outstanding stock may be ________________________________________________. Question also found in study guide

Which of the following management assertions for long-term liabilities is related to the ASB balance assertion of completeness?

What is a compensating control? Describe what type of compensating controls might be implemented in the finance and investment cycle.

In auditing for unrecorded long-term bonds payable,an audit team most likely will

Loan covenants are used for which of the following reasons?

Which of the following is not an estimate required in the finance and investment cycle?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits governmental Audits and Fraud Examinations

Overview of Sampling

Attributes Sampling

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Exam 10: Finance and Investment Cycle

Auditors count investment securities held by the client primarily to test the ASB balance assertion of

Capital stock may be subject to _____________________________ when independent registrars and transfer agents are employed. Question also found in study guide

The typical business activity in the financing and investment cycle that requires an accounting entry is

In confirming with an outside agent,such as a financial institution,that the agent is holding investment securities in the client's name,an auditor most likely gathers evidence in support of ASB balance assertion of existence and

In Case 10.4 (No Treasure in This Treasure Planet),Disney overvalued net assets by capitalizing unrecoverable production costs.The lesson for the auditors in this case was to

If the auditors discover that the carrying amount of a client's investments is overstated because of a loss in value that is other than a temporary decline in market value,they should insist that

The confirmation of notes payable to banks may use the _____________________________________ confirmation. Question also found in study guide

Which of the following would not be a typical feature of management's control over the production of estimates?

When stock is used in exchange for tangible assets,the auditor should inspect the assets to ensure the assets exist.

When circumstances call for extended procedures,information on outstanding stock may be ________________________________________________. Question also found in study guide

Which of the following management assertions for long-term liabilities is related to the ASB balance assertion of completeness?

What is a compensating control? Describe what type of compensating controls might be implemented in the finance and investment cycle.

In auditing for unrecorded long-term bonds payable,an audit team most likely will

Loan covenants are used for which of the following reasons?

Which of the following is not an estimate required in the finance and investment cycle?

Auditing and Assurance Services

Professional Standards

Engagement Planning

Management Fraud and Audit Risk

Risk Assessment: Internal Control Evaluation

Employee Fraud and the Audit of Cash

Revenue and Collection Cycle

Acquisition and Expenditure Cycle

Production Cycle

Completing the Audit

Reports on Audited Financial Statements

Other Public Accounting Services

Professional Ethics

Legal Liability

Internal Audits governmental Audits and Fraud Examinations

Overview of Sampling

Attributes Sampling

Variables Sampling

Auditing and Information Technology

Filters