Chap011-LN

Chap011-LN - Chapter 11: Long -Term Debt and Owners' Equity...

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Chapter 11: Long -Term Debt and Owners' Equity Business Process CHAPTER 11 Long-Term Debt and Owners' Equity Business Process After studying this chapter, you should be able to: 1. Describe the long-term debt and owners' equity business process. 2. Explain the transactions in the business process. 3. Understand an applicable financial reporting framework (GAAP) for recording debt, capital stock, and retained earnings transactions. 4. Understand misstatements (errors and fraud) that could be expected in the long-term debt and owners' equity business process. 5. Explain financial statement assertions for accounts in the business process. 6. Identify relevant assertions for significant accounts for the long-term debt and owners' equity business process. 7. Describe the procedures auditors use to gather evidence for internal controls in the long- term debt and owners' equity process. 8. Understand the methods auditors use to gather substantive evidence in the long-term debt and owners' equity process using substantive tests of transactions and substantive tests of balances. 9. Explain the disclosure requirements for accounts in the business process. Chapter 11: Long-Term Debt and Owners' Equity Business Process Chapter Highlights This chapter provides a description of the long-term debt and owners’ equity business process first from the accounting perspective and then from the auditing perspective. The accounts and the accounting transactions are reviewed as is the financial accounting framework for long-term debt and owners’ equity under U.S. GAAP and International Financial Reporting Standards (IFRS). Once the accounting for the business process is examined, management’s assertions for the financial statements are discussed and the potential misstatements in the long-term debt and owners’ equity process are evaluated. The relevant assertions identified for this process help to establish the tests of controls and substantive tests. The chapter then summarizes how the auditor determines whether the evidence collected is sufficient and appropriate to make an audit conclusion about the long-term debt and owners’ equity process and then presents the disclosures for the financial statements. To better understand the accounting transactions for the long-term debt and owners’ equity process, T- accounts and journal entries are used in the beginning of the chapter. Exhibit 11-4 provides an example of an Internal Control Questionnaire and Exhibit 11-5 provides Financial Information for the continuing BCS Example used to illustrate tests of controls and substantive tests. In addition, actual financial statement disclosures are presented in Exhibit 11-6. Chapter Outline
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This note was uploaded on 12/03/2011 for the course HIST 101 taught by Professor M during the Spring '11 term at NJIT.

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Chap011-LN - Chapter 11: Long -Term Debt and Owners' Equity...

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