Exam 22: Audit of the Capital Acquisition and Repayment Cycle

The audit procedure "examine duplicate copies of notes payable to determine whether the notes payable were dated on or before the balance sheet date" is done for which of the following balance-related audit objective?

When performing analytical procedures for notes payable,if actual interest expense is materially larger than the auditor's expectation,one possible cause would be interest payments on unrecorded notes payable.

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.

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

The auditor's independent estimate of interest expense from notes payable uses average interest rates and:

What are the two most important balance-related audit objectives in notes payable?

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

In the audit of the transactions and amounts in the capital acquisitions and repayments cycle,the auditor must take great care in making sure that the significant legal requirements affecting the financial statements have been properly fulfilled and:

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.

The accuracy of a dividend declaration can be audited by recalculating the amount on the basis of the dividend per share times the number of shares outstanding.

Discuss the overall objectives of the audit of notes payable.

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:

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 types of owners' equity transactions would require authorization by the board of directors?

All corporations must have a ________ account.

In the audit of notes payable,it is common to include tests of principal and interest payments as a part of the audit of the acquisitions and payment cycle because the payments are in the cash disbursements journal that is being sampled.It is also normal to test these transactions as part of the capital acquisitions and repayment cycle because:

All of the following are owners' equity accounts except for:

Any company with stock listed on a securities exchange is required to engage a(n)________.

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

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