Chapter 15 - Chapter 15 Auditing the Financing/Investing...

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Chapter 15 - Auditing the Financing/Investing Process: Long-Term Liabilities, Stockholders' Equity, and Income Statement Accounts 15-1 CHAPTER 15 AUDITING THE FINANCING/INVESTING PROCESS: LONG-TERM LIABILITIES, STOCKHOLDERS' EQUITY, AND INCOME STATEMENT ACCOUNTS Answers to Multiple-Choice Questions 15-11 d 15-16 d 15-12 b 15-17 d 15-13 b 15-18 d 15-14 b 15-19 b 15-15 b 15-20 c Solutions to Problems 15-21 a. The procedures that Maslovskaya should employ in examining the loans are as follows: Obtain an understanding of the business purpose of the loans made by the president. Confirm the loans, including terms, by direct communication. Recompute (or verifying) interest expense and interest payable. Recompute the long-term and short-term portions of the debt. Review minutes of meetings of the board of directors for proper authorization. Verify payments made during the year and transactions after year-end. Read the financial statements, including footnotes and loan agreements, and evaluating the adequacy of disclosure and compliance with restrictions. Consider any tax implications for the interest on the loan from the company’s president. Obtain a management representation letter. b. Broadwall's financial statements should disclose the following information
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Chapter 15 - Chapter 15 Auditing the Financing/Investing...

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