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

In the audit of a medium-sized manufacturing concern,which one of the following areas can be expected to require the least amount of audit time?

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

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

The primary reason for preparing a reconciliation between interest-bearing obligations outstanding during the year and interest expense presented in the financial statements is to

The registrar is responsible for preparing stock certificates and maintaining adequate stockholders' records.

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

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?

Where no independent stock transfer agents are employed and the corporation issues its own stocks and maintains stock records,canceled stock certificates should

For each of the following substantive procedures,first note whether it is a test of details of transactions or a test of details of account balances.Then decide for which assertion the test provides the best evidence. 1.Trace large cash receipts and payments to the source documents and the general ledger. 2.Examine copies of note and bond agreements. 3.Recompute accrued interest payable. 4.Review debt activity for a few days before and after year-end to determine whether transactions are included in the proper period. 5.Examine due dates on notes and bonds for proper classification between current and long term debt.

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

Of the following,which is the most important procedure that an auditor should use when making an overall review of the income statement?

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

Match each of the following controls with the assertion for long-term debt that it supports.

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

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.

You have been assigned the duty of auditing long-term debt and retained earnings for your client,Keys,Inc.Describe the tests you would use to support management's assertions regarding disclosure for these accounts.

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

Long-term borrowing should be properly authorized.