Chapter 22

Chapter 22 - Chapter 22 Multiple-Choice Questions 1. easy b...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 22 Multiple-Choice Questions 1. easy b Which of the following statements is correct? a. Bonds are frequently issued by companies in small amounts. b. There are relatively few transactions in the capital acquisition and repayment cycle, and each transaction is typically highly material. c. A primary emphasis in auditing debt is on existence. d. Audit procedures for Notes Payable and Interest Income are often performed simultaneously. 2. easy c The capital acquisition and repayment cycle does not include: a. payment of interest. b. payment of dividends. c. payment of vendor invoices. d. acquisition of capital through interest-bearing debt. 3. easy b Which of the following is not an objective of the auditor’s examination of notes payable? a. To determine whether internal controls are adequate. b. To determine whether client’s financing arrangements are effective and efficient. c. To determine whether transactions regarding the principal and interest of notes are properly authorized. d. To determine whether the liability for notes and related interest expense and accrued liabilities are properly stated. 4. easy c Which of the following statements regarding the capital acquisition and repayment cycle is true? a. Relatively few transactions affect the cycle, and most are smaller amounts. b. Large numbers of transactions affect the cycle, and most are smaller amounts. c. Relatively few transactions affect the cycle, and most are highly material. d. Large number of transaction affect the cycle, and most are highly material. 5. easy a The primary focuses of the audit of debt are: a. accuracy and completeness. b. accuracy and existence. c. completeness and valuation. d. accuracy and valuation. 6. easy a Responsibility for the issuance of new notes payable should be vested in the: a. board of directors. b. purchasing department. c. accounting department. d. accounts payable department. 7. easy c Which of the following accounts is not audited within the capital acquisition and repayment cycle? a. Notes payable. b. Interest expense. c. Accounts payable. d. Bonds payable. 8. easy a The auditor’s independent estimate of interest expense from notes payable uses average interest rates and: a. average notes payable outstanding. b. year-end notes payable outstanding. Arens/Elder/Beasley
Background image of page 1

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

View Full DocumentRight Arrow Icon
c. only notes payable above the level of materiality. d. only notes payable to major lenders. 9. easy c The tests of details of balances procedure which requires the auditor to trace the totals of the notes payable list to the general ledger satisfies the objective of: a. accuracy. b. existence. c. detail tie-in. d. completeness. 10. easy b The audit objective to determine that notes payable in the schedule actually exist is verified by the test of details of balances procedure to: a. foot the notes payable list. b.
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 15

Chapter 22 - Chapter 22 Multiple-Choice Questions 1. easy b...

This preview shows document pages 1 - 3. Sign up to view the full document.

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