AUDITING LL W/ CONNECT <C>
11th Edition
ISBN: 9781307416268
Author: MESSIER
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 15, Problem 15.15MCQ
To determine
Concept Introduction:
Every company who issue shares have to maintain stock records relating of issue of shares and how much are outstanding with the company.
To choose: The correct statement concerning the audit program for checking of share records.
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When a client company does not maintain its own capital stock records, the auditors should obtain written confirmation from the transfer agent and registrar concerninga. Restrictions on the payment of dividends.b. The number of shares issued and outstanding.c. Guarantees of preferred stock liquidation value.d. The number of shares subject to agreements to repurchase.
An audit plan for the examination of the retained earnings account should include a step that requires verification of the Market value used to charge retained earnings to account for a two-for-one stock split. Approval of the adjustment to the beginning balance as a result of a write-down of an account receivable. Authorization for both cash and stock dividends. Gain or loss resulting from disposition of treasury shares
An audit plan for the examination of the retained earnings account should include a step that requires verification of the (choose two steps)a. Market value used to charge retained earnings to account for a 2-for-1 stock split.b. Approval of the adjustment to the beginning balance as a result of a write-down of account receivables.c. Authorization for both cash and stock dividends declared and paid.d. Gain or loss resulting from disposition of treasury shares.
Chapter 15 Solutions
AUDITING LL W/ CONNECT <C>
Ch. 15 - Prob. 15.1RQCh. 15 - Prob. 15.2RQCh. 15 - Prob. 15.3RQCh. 15 - Prob. 15.4RQCh. 15 - Prob. 15.5RQCh. 15 - Prob. 15.6RQCh. 15 - Prob. 15.7RQCh. 15 - Prob. 15.8RQCh. 15 - Prob. 15.9RQCh. 15 - Prob. 15.10RQ
Ch. 15 - Prob. 15.11MCQCh. 15 - Prob. 15.12MCQCh. 15 - Prob. 15.13MCQCh. 15 - Prob. 15.14MCQCh. 15 - Prob. 15.15MCQCh. 15 - Prob. 15.16MCQCh. 15 - Prob. 15.17MCQCh. 15 - Prob. 15.18MCQCh. 15 - Prob. 15.19MCQCh. 15 - Prob. 15.20MCQCh. 15 - Prob. 15.21PCh. 15 - Prob. 15.22PCh. 15 - Prob. 15.23PCh. 15 - Prob. 15.24P
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- please explain your choicearrow_forwardWhich of the following audit procedures would not likely be performed for audits of shareholders’ equity?a. Read board of directors’ minutes for authorization of equity transactions.b. Confirm outstanding common and preferred stock with stock registrar.c. Compare valuation of stock to published market prices.d. Obtain management representation about number of shares issued and outstanding.arrow_forwardWhich of the following is the most important audit consideration when examining the stockholders’ equity section of a client’s balance sheet?a. Changes in the capital stock account are verified by an independent stock transfer agent.b. Stock dividends and stock splits during the year under audit were approved by the stockholders.c. Stock dividends are capitalized at par or stated value on the dividend declaration date.d. Entries in the capital stock account can be traced to resolutions in the minutes of meetings of the board of directors.arrow_forward
- When independent stock transfer agents are not employed and the corporation issues its own stock and maintains stock records, canceled stock certificates shoulda. Be defaced to prevent reissuance and attached to their corresponding stubs.b. Not be defaced but be segregated from other stock certificates and retained in a canceled certificates file.c. Be destroyed to prevent fraudulent reissuance.d. Be defaced and sent to the secretary of state.arrow_forward. For large publicly listed and traded companies, which of the following should not be done as a step in gathering evidence concerning the company's capital stock account: a. Analysis of capital stock accounts b. Confirmation of Shares issued to existing stockholders c. Accounting for the proceeds of major stock issues d. Reconciliation of stock certificate book with the general ledgerarrow_forwardWhich feature is not applicable to common stock ownership?a. Right to receive dividends before preferred stockshareholders.b. Right to vote on appointment of external auditor.c. Right to receive residual assets of the company shouldit cease operations.d. All of the above are applicable to common stockownership.arrow_forward
- Which one of the following alternatives is correct in regarding to recording the transaction for receiving share applications and money from the public? a. The bank account must be debited with the amount received and a temporary "application and allotment account" is credited b. The bank account must be debited with the amount received and a temporary "application and allotment account" is credited with the value of the shares issued c. The bank account must be debited with the amount received and a temporary "application and allotment account" is credited to the extent of the shares offered to the public d. The bank account must be credited with the amount received and a temporary "application and allotment account" is debitedarrow_forwarda. Which of the following disclosures regarding stock is not required to be reported on the balance sheet or in the notes to the financial statements? the par value and the number of shares authorized, issued, and outstanding. preferred stock characteristics, including dividend rate. any dividends in arrears. a list of names of stockholders.arrow_forwardThe following audit procedures are commonly performedby auditors in the verification of owners’ equity:1. Review the articles of incorporation and bylaws for provisions about owners’ equity.2. Analyze all owners’ equity accounts for the year and document the nature of anyrecorded change in each account.3. Account for all certificate numbers in the capital stock book for all shares outstanding.4. Examine the stock certificate book for any stock that was cancelled.5. Review the minutes of the board of directors’ meetings for the year for approvalsrelated to owners’ equity.6. Recompute earnings per share.7. Review debt provisions and senior securities with respect to liquidation preferences,dividends in arrears, and restrictions on the payment of dividends or the issue of stock.a. State the purpose of each of these seven audit procedures.b. List the type of misstatements the auditors can uncover by the use of each auditprocedure.arrow_forward
- The par value of common stock represents a. the estimated fair value of the stock when it was issued. b. the liability ceiling of a shareholder when a company undergoes bankruptcy proceedings. c. the total value of the stock that must be entered in the issuing corporation’s records. d. the amount that must be recorded on the issuing corporation’s record as paid-in capital.arrow_forwardWhy the Nature of internal control over the payment of dividends as in the case of stock issuance is it depends primarily upon whether the company performs the function of dividend payment itself or utilizes the services of an independent dividend paying agent?arrow_forwardDescribe the accounting and reporting for reacquisition of shares.arrow_forward
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