Exam 15: Auditing the Financing Investing Process: Long-Term Liabilities Stockholders Equity and Income Statement Accounts

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

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

During the year under audit, a company has completed a private placement of a substantial amount of bonds. Which of the following is the most important step in the auditor's program for the audit of bonds payable?

Before expressing an opinion concerning the results of operations, the auditor would most likely proceed with the examination of the income statement by

During its fiscal year, a company issued, at a discount, a substantial amount of bonds. When performing audit work in connection with the bond issue, the independent auditor should

Examining cancelled stock certificates addresses the assertion of

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

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

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.

The auditor's program for the examination of long-term debt should include steps that require the

What kind of information would typically be found on an income statement account analysis working paper? What kind of tests can an auditor perform using this information? Why would an auditor conduct additional analysis on an income statement account?

Notes receivable is a common type of long-term financing.

Three types of transactions usually occur in stockholders' equity: issuance of stock, repurchase of stock, and payment of dividends.

Identify the four major assertions made regarding stockholders' equity and describe one control activity for each.

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

The auditor typically begins an audit of retained earnings by obtaining a schedule of account activity for the period.

Which audit procedure is most closely related to management's assertion regarding presentation and disclosure of liabilities?

In performing tests concerning the granting of stock options, an auditor should

Valuation and allocation is most likely an issue for long-term debt if

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