Auditing Chapter 13 Homework

Pregunta 1 de 30

1

Which of the following is the auditor’s primary objective when auditing debt?

Selecciona una de las siguientes respuestas posibles:

a. Proper presentation and disclosure, including important restrictions contained in the debt.
b. Understatement of the debt obligation focusing on the completeness assertion.
c. Valuation of gains or losses on refinancing debt.
d. Proper valuation of bond premium or bond discount, including amortization valuation.

Explicación

Pregunta 2 de 30

1

Which of the following is not a common debt covenant restriction?

Selecciona una de las siguientes respuestas posibles:

a. Specification of a maximum debt-equity ratio.
b. Maintenance of a minimum working-capital ratio.
c. Maintenance of a minimum level of retained earnings before dividends can be paid.
d. Specification of a minimum earnings per share.

Explicación

Pregunta 3 de 30

1

Which of the following results in a situation where an auditor has the least amount of difficulty in determining stock valuation?

Selecciona una de las siguientes respuestas posibles:

a. When stock is exchanged for another business.
b. When stock is issued for land.
c. When stock options are issued and exercises occur.
d. When stock is issued for cash.

Explicación

Pregunta 4 de 30

1

How would an auditor generally measure the value of a stock option expense?

Selecciona una de las siguientes respuestas posibles:

a. Appraised value.
b. All of these methods can be used.
c. By computing a weighted average value of all classes of stock authorized.
d. Fair value.

Explicación

Pregunta 5 de 30

1

When auditing the gains or losses on refinancing debt, the auditor primarily focuses on which assertion?

Selecciona una de las siguientes respuestas posibles:

a. Presentation and disclosure.
b. Existence.
c. Valuation.
d. Completeness.

Explicación

Pregunta 6 de 30

1

When auditing the premium or discount on bonds (including amortization), the auditor primarily focuses on which assertion?

Selecciona una de las siguientes respuestas posibles:

a. Completeness.
b. Existence.
c. Presentation and disclosure.
d. Valuation.

Explicación

Pregunta 7 de 30

1

Which of the following is not an inherent risk typically associated with recording debt transactions?

Selecciona una de las siguientes respuestas posibles:

a. Interest expense not being properly recorded.
b. Debt not being properly classified.
c. Debt not being properly authorized.
d. Failure to accrue interest expense.

Explicación

Pregunta 8 de 30

1

The inherent risk of proceeds from stock sales not being received is most likely related to which of the following management assertions?

Selecciona una de las siguientes respuestas posibles:

a. Existence.
b. Presentation and disclosure.
c. Valuation.
d. Completeness.

Explicación

Pregunta 9 de 30

1

An auditor determines that there is an inherent risk that all stock repurchased is not recorded as treasury stock. This determination is most likely tied to which of the following management assertions?

Selecciona una de las siguientes respuestas posibles:

a. Completeness.
b. Presentation and disclosure.
c. Valuation.
d. Existence.

Explicación

Pregunta 10 de 30

1

An auditor determines that there is an inherent risk that dividends may be recorded and paid before being declared. This determination is most likely tied to which of the following management assertions?

Selecciona una de las siguientes respuestas posibles:

a. Presentation and disclosure.
b. Valuation.
c. Completeness.
d. Existence.

Explicación

Pregunta 11 de 30

1

An auditor determines that there is an inherent risk that a company has not included both the basic earnings per share and diluted earnings per share amounts in financial statements even though significant dilutive securities are part of the company’s complex capital structure. This determination is most likely tied to which of the following management assertions?

Selecciona una de las siguientes respuestas posibles:

a. Existence.
b. Valuation.
c. Rights and obligations.
d. Presentation and disclosure.

Explicación

Pregunta 12 de 30

1

Which of the following is not a potential fraud related to debt?

Selecciona una de las siguientes respuestas posibles:

a. Dividends are paid in violation of restrictive covenants.
b. Debt is not properly authorized.
c. Entire loan payments are charged to either principal or interest.
d. Long-term or short-term debt is misclassified.

Explicación

Pregunta 13 de 30

1

What type of risk is intentional failure by management to accurately disclose violations of debt covenants?

Selecciona una de las siguientes respuestas posibles:

a. Fraud risk.
b. Inherent risk.
c. Detection risk.
d. Control risk.

Explicación

Pregunta 14 de 30

1

Which of the following would an auditor not typically perform as part of gaining an understanding of the client’s controls related to debt?

Selecciona una de las siguientes respuestas posibles:

a. Recalculate interest expense.
b. Inquire of management about the process for reviewing compliance with debt covenants.
c. Review policies related to approval required for new debt.
d. Review the client’s documentation of controls.

Explicación

Pregunta 15 de 30

1

Which of the following does an auditor consider when gaining an overall understanding of the client’s internal controls?

Selecciona una de las siguientes respuestas posibles:

a. Transaction controls at the account level only.
b. Entity-wide controls at the assertion level only.
c. Both entity-wide controls and transaction controls at the account and assertion levels.
d. Entity-wide controls at the account level only.

Explicación

Pregunta 16 de 30

1

Which of the following are entity-wide components of internal control that can mitigate the risk of material misstatement related to debt?

Selecciona una de las siguientes respuestas posibles:

a. Monitoring controls.
b. All of these are entity-wide components of internal control.
c. Information and communication.
d. Risk assessment.

Explicación

Pregunta 17 de 30

1

Which of the following is a typical control for debt?

Selecciona una de las siguientes respuestas posibles:

a. Upper managers approve all new debt.
b. The stockholders approve all new debt.
c. The CFO approves all new debt.
d. The board of directors approves all new debt.

Explicación

Pregunta 18 de 30

1

Which of the following statements is typically not true regarding controls related to proper accounting for stock option grants?

Selecciona una de las siguientes respuestas posibles:

a. The proper accounting for stock option grants is researched by the organization’s accountant.
b. The analysis of the accountant regarding stock option grants is reviewed by the organization’s legal counsel.
c. The analysis of the accountant regarding stock option grants is reviewed by the board of directors.
d. The analysis of the accountant regarding stock option grants is reviewed by the CFO.

Explicación

Pregunta 19 de 30

1

Which of the following statements is true regarding planning analytical procedures for debt and stockholders’ equity transactions?

Selecciona una de las siguientes respuestas posibles:

a. The long-term debt to equity ratio could be considered by the auditor as part of the planning analytical procedures.
b. Because there are typically only a few stockholders’ equity transactions, the auditor is not required to perform planning analytical procedures for stockholders’ equity accounts.
c. If unusual or unexpected relationships are identified by planning analytical procedures, the auditor should stick with the original expectations of misstatements, because this could be an anomaly and bias the audit overall.
d. Trend analysis would not typically be performed for debt.

Explicación

Pregunta 20 de 30

1

Which of the following statements is true regarding the appropriate audit procedures to perform for debt and stockholder’s equity accounts?

Selecciona una de las siguientes respuestas posibles:

a. The auditor will usually decide to test debt, including interest, using only substantive procedures.
b. None of these statements is true.
c. Testing debt, including interest, is typically accomplished using only control procedures.
d. When auditing stockholders’ equity transactions, the auditor commonly uses a control procedure approach, but uses only substantive procedures to test debt obligation transactions.

Explicación

Pregunta 21 de 30

1

For integrated audits, when does the auditor test the operating effectiveness of important controls?

Selecciona una de las siguientes respuestas posibles:

a. As of the end of the second quarter of the client’s fiscal year.
b. None of these answers is correct.
c. As of the beginning of the client’s fiscal year.
d. As of the client’s year end.

Explicación

Pregunta 22 de 30

1

Which of the following is not a typical test of controls when auditing debt and equity transactions?

Selecciona una de las siguientes respuestas posibles:

a. Comparing current year account balances with prior year account balances.
b. Inquiry of personnel performing the control.
c. Observation of the control being performed.
d. Reperformance of the control by the auditor testing the control.

Explicación

Pregunta 23 de 30

1

Which of the following procedures would be included in the auditor’s audit program for long-term debt?

Selecciona una de las siguientes respuestas posibles:

a. Investigation of credits to the bond interest income account.
b. Review debt loan agreements.
c. Verification of the existence of the bondholders.
d. Inspection of the accounts payable master file.

Explicación

Pregunta 24 de 30

1

Which of the following is the least important in helping the auditor develop an independent expectation of interest expense as a substantive analytical procedure?

Selecciona una de las siguientes respuestas posibles:

a. Examine disaggregated data by type of debt.
b. Examine an interest revenue schedule.
c. Determine average interest rates.
d. Determine average debt outstanding.

Explicación

Pregunta 25 de 30

1

Which of the following will an auditor not perform when looking for additions to debt?

Selecciona una de las siguientes respuestas posibles:

a. Trace the proceeds into the bank statement.
b. Examine canceled notes.
c. Trace the proceeds into the cash receipts records.
d. Obtain assurance regarding board approval of the debt through review of board meeting minutes.

Explicación

Pregunta 26 de 30

1

Which of the following will an auditor not perform when looking for debt reductions?

Selecciona una de las siguientes respuestas posibles:

a. Examine canceled checks.
b. Examine proceeds into the cash receipts records.
c. Examine canceled notes.
d. Examine payments through the cash disbursements records.

Explicación

Pregunta 27 de 30

1

Which of the following is not a substantive test of details for dividends?

Selecciona una de las siguientes respuestas posibles:

a. Agreement of the dividend amount with the payment in the cash disbursements journal.
b. Examination of the minutes of the board of directors’ meetings for the dividend record date.
c. Calculation of the dividend payout ratio.
d. Examination of the minutes of the board of directors’ meetings for authorization of the dividend per share amount.

Explicación

Pregunta 28 de 30

1

In those audits where there is a heightened risk of fraud related to debt, which of the following will the auditor not typically perform?

Selecciona una de las siguientes respuestas posibles:

a. Vouch and trace loan proceeds and debt payments.
b. Search public records to identify debt.
c. Send confirmations to lenders and creditors, including confirmation of compliance with any debt covenants.
d. Obtain photocopies of supporting documents.

Explicación

Pregunta 29 de 30

1

Which of the following is not an element of pensions and other postemployment benefits that is difficult to estimate?

Selecciona una de las siguientes respuestas posibles:

a. Long-term interest rates to discount future costs back to present value.
b. The future earnings of employees prior to retiring for defined benefit plans.
c. Projected lifetime of former employees that will receive a pension.
d. Current amounts earned on pension plan assets.

Explicación

Pregunta 30 de 30

1

An audit of the other postemployment benefits does not require estimates with respect to which of the following?

Selecciona una de las siguientes respuestas posibles:

a. Changes in average life expectancies.
b. Changes in coverage.
c. Changes in human resources personnel in charge of postemployment benefits.
d. Changes in medical expenses.

	Creado por Kayla Harbaugh hace casi 4 años