Exam 10: Finance and Investment Cycle

A _____________________________ is a financial institution appointed to record the issuance and ownership of company securities. Question also found in study guide

Which of the following controls would be most effective in ensuring that the proper custody of assets in the investing cycle is maintained?

All corporate capital stock transactions should ultimately be traced to the

The typical assertion relating to investments and related accounts in a manufacturing company would not include the assertion that

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) specific 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. Consider each item separately - no credit will be given for generic controls (e.g. policies and procedures; separation of duties (without specifics); discuss with management.)

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

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

When fixed assets are acquired during the year under audit,auditors should inspect the assets.

The focus of controls in the finance and investment cycle is on

The typical business activity of the finance and investment cycle would not include

A derivative instrument is designed to remove risk of adverse price movements from a transaction.

Selecting a sample of paid notes and tracing interest to the general ledger account is a test of the PCAOB assertion for

In Case 10.4 in the text book (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

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

Tests of controls in the finance and investment cycle

Which of the following is not a typical assertion relating to owners' equity?