Chapter 22 Slides

Chapter 22 Slides - 22 - 1 Click to edit Master subtitle...

Info iconThis preview shows pages 1–6. Sign up to view the full content.

View Full Document Right Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 22 - 1 Click to edit Master subtitle style 22 - 1 Audit of the Capital Acquisition and Repayment Cycle Chapter 22 22 - 2 Accounts in the Cycle Notes payable Contracts payable Mortgages payable Bonds payable Interest expense Accrued interest Appropriations of retained earnings Treasury stock Dividends declared Cash in the bank Capital stock common Capital stock preferred Paid-in capital in excess of par Donated capital Retained earnings Dividends payable Proprietorship capital account Partnership capital account 22 - 3 Characteristics of the Capital Acquisition and Repayment Cycle Relatively few transactions affect the account balances, but each one is often highly material in amount. The exclusion of a single transaction could be material in itself. A legal relationship exists between the client entity and the holder of the stock, bond, or similar ownership document. A direct relationship exists between the interest and dividends accounts and debt and equity. 22 - 4 4/12/10 Methodology for Designing Tests of Details of Balances Notes Payable Identify client business risks affecting notes payable Set tolerable misstatement and assess inherent risk for notes payable Assess control risk for notes payable Design and perform analytical procedures for notes payable Design and perform tests of controls and substantive tests of transactions for capital acquisition and repayment cycle Audit procedures Sample size Items to select Timing Design tests of details of notes payable to satisfy balance-related audit objectives 44 Acct 4510/5510 Phase I Phase III Phase II Phase III Typically not relevant 22 - 5 Objectives of the Audit of Notes Payable Internal controls over notes payable are adequate See internal controls in a couple of slides. Transactions for principal and interest are properly authorized and recorded The liability for notes payable and the related interest expense and accrued liability are properly stated....
View Full Document

Page1 / 23

Chapter 22 Slides - 22 - 1 Click to edit Master subtitle...

This preview shows document pages 1 - 6. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online