Exam 15: Debt and Equity Capital

When no independent stock transfer agent is employed and the corporation issues its own stocks and maintains stock records, canceled stock certificates should:

In which of the following accounts would one expect a related party transaction to be easiest to detect?

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

Which of the following most likely would approve the issuance of notes payable?

The auditor can best verify a client's bond sinking fund transactions and year-end balance by:

Changes in capital stock accounts should normally be approved by:

For audit purposes, a corporation's articles of incorporation are normally:

In auditing long-term debt, an auditor would be most likely to:

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:

Bond transactions are normally confirmed with:

The formal documentation creating bond indebtedness is called the indenture.

The auditors are required to confirm bond holdings directly with the bondholders.

Which of the following is an auditor most likely to confirm from the transfer agent and registrar?

The auditors should determine that the issuance of bonds was approved by the company's stockholders.

Registered bondholders receive periodic interest payments without any action on their part.

A registrar/transfer agent system relating to capital stock is most likely used by:

Dividends should be authorized by the stockholders of the corporation.

When the auditors obtain an understanding of internal control for the financing cycle documentation will frequently include a written description as well as a(n):

For a continuing client, the auditors will often find that audit time required for capital stock is small in relation to the dollars recorded in the accounts.

To establish effective internal control over a corporation's stock transactions, the corporation should utilize the services of a independent registrar and transfer agent. a. Describe the functions performed by the stock registrar. b. Describe the functions performed by the transfer agent. c. Describe the information that is typically requested by the auditors in a confirmation sent to the registrar.