Chap010 - Chapter 10 - Finance and Investment Cycle Chapter...

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Chapter 10 - Finance and Investment Cycle Chapter 10 Finance and Investment Cycle Multiple Choice Questions 1. The typical business activity of the finance and investment cycle would not include A. Proposals for cash forecasts, capital budgets, and business expansion B. Analyses of excess cash funds C. Reconciliation of cash D. Sale of stocks, bonds, or notes Difficulty: Easy Source: Original 2. Selecting a sample of paid notes and tracing interest to the general ledger account is a test of the PCAOB assertion for A. Accounting B. Valuation or allocation C. Completeness D. Existence or occurrence Difficulty: Medium Source: Original 3. The typical assertions related to investments and related accounts would not include the PCAOB assertion that A. Capitalized intangible costs relate to intangibles acquired in exchange transactions B. Amortization is properly calculated C. Research and development costs are properly classified D. Goodwill is valued at market value Difficulty: Medium Source: Original 10-1
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Chapter 10 - Finance and Investment Cycle 4. The decision of a company to have a transfer agent handle exchanges of shares is related primarily to which of the functional responsibilities? A. Rights and obligations B. Custody C. Recordkeeping D. Periodic reconciliation Difficulty: Easy Source: Original 5. ABC Company has issued a bond that pays 5% interest semi-annually to bond holders on record June 30 and December 30. Payments are made on July 15 and January 15. ABC Company has a December 31 fiscal year end. The auditor vouches the January 15, 2009 payment to the liabilities recorded on the December 31, 2008 balance sheet. Which of the following ASB balance assertions if the auditor testing? A. Existence B. Rights and obligations C. Completeness D. Valuation Difficulty: Medium Source: Original 6. Auditors count investment securities held by the client primarily to test the ASB balance assertion of A. Existence B. Rights and obligations C. Completeness D. Valuation Difficulty: Easy Source: Original 10-2
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Chapter 10 - Finance and Investment Cycle 7. Which of the following is not a substantive audit procedure for estimates of management? A. Recalculating the mathematical estimate B. Observing whether estimates are prepared by qualified personnel C. Developing an independent estimate based on alternative assumptions D. Comparing the estimate to subsequent events before the end of fieldwork Difficulty: Hard Source: Original 8. Which of the following would not be a place in which owners' equity transactions would be documented? A. Capital budget B. Minutes of the meetings of the board of directors C. Proxy statements D. Securities offering registration statements Difficulty: Hard Source: Original 9. If it would be appropriate to confirm capital stock, the auditor would obtain the confirmation from A. Management B. The board of directors C. Stockholders D. An independent registrar Difficulty: Easy Source: Original 10-3
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This note was uploaded on 05/26/2011 for the course ACCT 403 taught by Professor Mark during the Spring '10 term at Strayer.

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Chap010 - Chapter 10 - Finance and Investment Cycle Chapter...

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