 Show CHAPTER 15 MULTIPLE CHOICE d 1.A company holds bearer bonds as a short-term investment. Responsibility for custody of these bonds and submission of coupons for periodic interest collections probably should be delegated to the a.Chief accountant. b.Internal auditor. c.Cashier. d.Treasurer. (AICPA ADAPTED) b 2.Of the following, which is the most efficient audit procedure for testing accrued interest earned on bond investments? a.Tracing interest declarations to an independent record book. b.Recomputing interest earned. c.Confirming interest rate with the issuer of the bonds. d.Vouching the receipt and deposit of interest checks.(AICPA ADAPTED) d 3.During the audit of a publicly held company, the auditor could obtain written confirmation regarding long-term bond transactions from the a.Bond holders. b.Client's attorney. c.Internal auditors. d.Trustee. (AICPA ADAPTED) b 4.The auditor's program for examining long-term debt should include a.Verification of the existence of the bondholders. b.Examination of any bond trust agreement. c.Inspection of the accounts payable subsidiary ledger. d.Investigation of credits to the bond interest income account.(AICPA ADAPTED) d 5.Jones was engaged to audit the financial statements of Gamma Corporation, a June 30 year-end client. Having completed testing of the investment securities, which of the following is the best method of verifying the accuracy of recorded dividend income? a.Tracing recorded dividend income to cash receipts records and validated deposit slips. b.Utilizing analytical review techniques and statistical sampling. c.Comparing recorded dividends with amounts appearing on Federal Information Form 1099. d. Comparing recorded dividends with a standard financial reporting service's record of dividends. (AICPA ADAPTED) a6.A company has temporarily excess funds to invest. The board of directors decided to purchase marketable securities and assigned the future purchase and sale decisions to a responsible financial executive. The best person(s) to make periodic reviews of the investment activity would be a.The investment committee of the board of directors. b.The treasurer. c.The corporate controller. d. The chief operating officer of the company.(AICPA ADAPTED) 107 How do you test for long term debt audit?My customary tests for auditing debt are as follows:. Summarize and test debt covenants.. Review new leases to determine if debt should be recorded.. Confirm all significant debt with lenders.. Determine if all debt is classified appropriately (as current or noncurrent). What are the most important assertions for long term debt?-The most important assertions to the auditor for long-term debt are occurrence, authorization, completeness, valuation, and classification.
Why is it important that auditors determine if the client is complying with debt provisions?A likely reason that consideration of client compliance with debt provisions is important to an audit is that violation of such debt provisions may affect the total recorded: current liabilities. A transfer agent and a registar are most likely to provide the auditor with evidence on: shares issued and outstanding.
Which of the following is an auditor most likely to confirm from the transfer agent and registrar?Which of the following is an auditor most likely to confirm from the transfer agent and registrar? Total shares of stock issued. The auditors' program for the examination of long term debt should include steps that require the: Examination of any bond trust indenture.
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The auditors program for the examination of long-term debt should include steps that require the:
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