ch10 - ch10 Student 1 Financial planning starts with the chief financial officer's cash flow forecast True False 2 Sales of capital stock and debt

ch10 - ch10 Student 1 Financial planning starts with the...

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ch10Student: ___________________________________________________________________________1.Financial planning starts with the chief financial officer's cash flow forecast. True False2.Sales of capital stock and debt financing transactions usually are authorized by the board of directors. True False3.In large companies, custody of stock certificate books is a significant management problem. True False4.Documenting ownership of bonds can be handled by a trustee having duties and responsibilities similar to those of registrars and transfer agents. True False5.All investment policies should be approved by the board of directors or its investment committee. True False6.The most significant reconciliation opportunities in the investment and intangible accounts are confirmation with brokers and the inspection and count of negotiable securities certificates. True False7.Reliance on controls normally reduces the extent of substantive audit procedures on finance and investment cycle accounts. True False8.The segregation of functional responsibilities is relatively easy for the finance and investment cycle. True False9.Auditors' test of controls over the production of estimates amounts to inquiries and observations. True False10.It is very common for auditors to perform substantive procedures on 100 percent of the details in the finance and investment accounts. True False11.When there are no independent agents, most audit evidence about capital stock is gathered by confirmation directly with the stockholders. True False12.Owners' equity transactions usually are not well documented. True False13.The primary audit concern with the verification of long-term liabilities is that all liabilities are recorded and that the interest expense is properly paid or accrued. True False14.When fixed assets are acquired during the year under audit, auditors should inquire about the source of funds for financing the new asset. True False15.Confirmation requests should be sent only to lenders with a liability balance at the audit date. True False
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16.Confirmation and inquiry procedures are not required for a class of items loosely termed off-balance-sheet information. True False17.The balance-sheet classification of investments by management should be confirmed with outside parties. True False18.The preferred source of fair values for investments is management's estimate of what the market value should be. True False
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  • Spring '12
  • janigrt
  • Financial audit, investment cycle

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