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. All of the above are correct.
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.
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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 expen and accrued
liabilities are properly stated.
4. easy c Which of the following statements regarding the capital acquisition and repayment cycle is true?
a. Few transactions affect the cycle, and most are smaller amounts.
b. Large numbers of transactions affect the cycle, and most are smaller amounts.
日历节日c. Few transactions affect the cycle, and most are highly material.
d. None of the above is tru
e.
5. easy a The primary focus 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 expen.
锐角和钝角的区别c. Accounts payable.
d. Bonds payabl
e.
8. easy c The auditor’s independent estimate of interest
expen, using average notes payable outstanding and average interest rates, tests:
a. the reasonableness of interest expen.
b. for omitted notes payable.
c. both a and b.
d. none of the abov
e.
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. confirm notes payable.
c. recalculate interest expen.
d. examine the balance sheet for proper disclosure of noncurrent portions.
11. easy c Tolerable misstatement is often t at a(n) _____ level for notes payable.
a. high
b. moderate
c. low
d. unknown
12. easy c When auditing interest-bearing debt, the auditor should ______ verify the related interest expen and interest payable.
a. not
b. attempt to
c. simultaneously
d. never
13. easy d Which of the following accounts would not normally be en in the equity ction of the balance sheet?
a. Donated capital
b. Dividends declared
c. Common stock
d. Accrued revenue
14. medium a Which one of the following is not a characteristic of the capital acquisition and repayment cycle?
a. The exclusion of a few transactions is rarely material by itlf.
b. There is a legal relationship between the client and the holder of the equity curities.安徽有什么好吃的
c. There is a direct relationship between the interest and dividends accounts and debt and
equity.
d. Relatively few transactions affect the account balances, but each transaction is often
highly material in amount.
15. medium c Which of the following statements is true?
a. There is an inver relationship between the interest and dividends accounts and debt and
equity.
b. There is no relationship between the interest and dividends accounts and debt and equity.
c. There is a direct relationship between the interest and dividends accounts and debt and
equity.
d. None of the above is tru
e.
16. medium d Assd control risk and results of substantive tests of transactions are normally unimportant for designing tests of details of balances for which of the following accounts?
a. Accounts receivable.
b. Inventory.
c. Accounts payable.
d. Notes payabl
e.
17. medium b In the audit of the transactions and amounts in the capital acquisitions and repayments cycle, the
auditor must take great care in making sure that the significant legal requirements affecting the
financial statements have been properly fulfilled and:
a. any violations are reported to the SEC.
b. are adequately disclod in the financial statements.
c. must issue a disclaimer if they haven’t b
een fulfilled.
d. any departures from the agreements are made with management’s knowledge and connt.
18. medium d Which of the following is an auditor least likely to consider in determining the appropriate tests of details of balances for notes payable?
a. Business risk.
b. Inherent risk.
c. Results of analytical procedures.
d. Acceptable audit risk.
19. medium c Which of the following audit tests would provide evidence regarding the balance-related audit objective of existence for an audit of notes payable?
a. Examine due dates on duplicate copies of notes.
b. Examine balance sheet for proper prentation and disclosure of notes payable.
c. Examine corporate minutes for loan approval.
d. Foot the notes payable list for notes payable and accrued interest.
20. medium a Which of the following balance-related audit objectives is not applicable to the audit of notes payable?
a. Realizable value.
b. Detail tie-in.
c. Cutoff.
d. Classification.
21. medium b When there are not numerous transactions involving notes payable during the year, the normal starting point for the audit of notes payable is:
a. a schedule of notes payable and accrued interest prepared by the audit team.
b. a schedule of notes payable and accrued interest obtained from the client.
c. a schedule of only tho notes with unpaid balances at the end of the year prepared by the
client.
d. the notes payable account in the general ledger.
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22. medium d When there are numerous transactions involving notes payable during the year, the auditor will likely:
a. prepare a schedule of notes payable and accrued interest prepared.
b. review a schedule of notes payable and accrued interest obtained from the client.
c. request the client to prepare a schedule of only tho notes with unpaid balances at the end
of the year.
d. perform some other procedur
e.
23. medium b The tests of details of balances procedure which requires the auditor to examine notes paid after year-end to determine whether they were liabilities at the balance sheet date is an attempt to satisfy the audit objective of:
a. existence.
b. completeness.
c. accuracy.
d. classification.
24. medium c Which of the following owners’
equity transactions do corporations not record in their accounting systems?
a. Issuance of cash dividends.
b. Issuance of preferred stock.
c. Sale of common stock on the condary market.
d. Each of the above is recorded.
25. medium b The audit of owners’
equity of public and private companies is very different. Which of the following is not one of the differences?
a. The number of transactions (private companies have fewer transactions).
b. Payment of dividends (public companies rarely pay dividends).
c. Complexity of transactions (public companies generally have more complex transactions).
d. None of the above is different.
26. medium d The audit objective that requires that existing notes payable are included in the notes payable schedule is satisfied by performing which of the following audit procedures?
a. confirm notes payable.
b. trace the total of the notes payable schedule to the general ledger.
c. review the notes payable schedule to determine whether any are related parties.
陈冠希纪录片d. obtain confirmations from creditors who have held notes from the client in the past and are
not currently included in the notes payable schedule.
27. medium d Which of the following owners’ equity transactions usually require specific authorization from a company’s board of directors?
a. Repurcha of common stock.
b. Issuance of common stock.
c. Declaration of dividends.
d. All of the above require authorization.
28. medium d When a company maintains its own records of stock transactions and outstanding stock, internal controls must be adequate to ensure that:
a. actual owners are recorded in the corporate records.
b. the correct amount of dividends is paid to stockholders owning the stock on the dividend
record date.
c. the potential for misappropriation of asts is minimize
d.
d. each of the abov
e.
29. medium d The audit objective that requires the auditor to determine that notes payable on the notes payable schedule are properly classified can be tested by performing the procedure to:
a. confirm notes payable.
b. examine corporate minutes for loan approval.
c. examine notes, minutes, and bank confirmations for restrictions.
d. review the notes to determine whether any are with related parties.
30. medium c The amount of time spent verifying owners’
equity is frequently minimal for cloly held corporations becau:
a. the companies are so small that it is not necessary to audit the capital ction.
b. the few owners all have access to the books so the auditor spends more time on accounts
like liabilities, which affect outsiders.
c. there are few if any transactions during the year for the capital stock accounts, except for
earnings and dividends.
d. there is no public interest in the companies.
31. medium d Which of the following types of owners’ equity transactions would
not require authorization by the board of directors?
a. Issuance of capital stock.
b. Repurcha of capital stock.
c. Declaration of dividends.
d. None of the abov
e.
32. medium b The record of the issuance and repurcha of capital stock for the life of the corporation is maintained in the:
a. shareholders’ capital stock master file.
b. capital stock certificate record.
c. schedule of stock owners.
d. corporate directory.
33. medium d The record of the outstanding shares at any given time is maintained in the:
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a. corporate directory.
b. stock certificate books.
c. schedule of stock owners.
d. shareholders’ capital stock master fil
e.
34. medium a When a dividend is declared by the board of directors, the source for determining who should receive dividend checks is the:
a. shareholders’ capital stock master file.
b. stock certificate books.
c. common stock account in the general ledger.
d. corporate directory.
35. medium d The authorization of an issuance of capital stock normally includes all but which of the following?
a. Type of stock to be issued.
b. Number of shares to be issued.巧治失眠
c. Date shares are to be issue
d.
d. Amount of dividend to be paid on shares issued.
36. medium d Any company with stock listed on a curities exchange is required to engage a(n) _________.
a. equity analyst
b. stock transfer agent
c. independent registrar
d. equity placement specialist
