Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Textbook Question
Chapter 15, Problem 32HOQ
The auditors can best verify a client’s bond sinking fund transactions and year-end balance by:
- (1) Recomputation of interest expense, interest payable, and amortization of bond discount or premium.
- (2) Confirmation with individual holders of retired bonds.
- (3) Confirmation with the bond trustee.
- (4) Examination and count of the bonds retired during the year.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
In auditing for unrecorded long-term bonds payable, an audit team most likely willa. Perform analytical procedures on the bond premium and discount accounts.b. Examine documentation of assets purchased with bond proceeds for liens.c. Compare interest expense with the bond payable amount for reasonableness.d. Confirm the existence of individual bondholders at year-end.
An audit plan for noncurrent debt should include steps that require
a.
Inspecting the accounts payable subsidiary ledger
b.
Examining bond trust indentures.
c.
Investigating credits to the bond interest income account.
d.
Verifying the existence of the bondholders.
e.
Tracing vendor invoices to the account payable subsidiary ledger.
An audit team would most likely verify the interest earned on bond investments bya. Vouching the receipt and deposit of interest checks.b. Confirming the bond interest rate with the issuer of the bonds.c. Recomputing the interest earned on the basis of face amount, interest rate, and period held.d. Testing internal controls relevant to cash receipts.
Chapter 15 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 15 - What does the trust indenture used by a...Ch. 15 - Long-term creditors often insist upon placing...Ch. 15 - Prob. 3RQCh. 15 - Prob. 4RQCh. 15 - Prob. 5RQCh. 15 - Prob. 6RQCh. 15 - Prob. 7RQCh. 15 - Prob. 8RQCh. 15 - Prob. 9RQCh. 15 - Prob. 10RQ
Ch. 15 - Mansfield Corporation has outstanding an issue of...Ch. 15 - Prob. 12RQCh. 15 - Prob. 13RQCh. 15 - What do you consider to be the most important...Ch. 15 - What is the primary responsibility of an...Ch. 15 - In the audit of a small corporation that issues...Ch. 15 - Prob. 17RQCh. 15 - Prob. 18RQCh. 15 - Prob. 19RQCh. 15 - Corporations sometimes issue their own capital...Ch. 15 - Prob. 21RQCh. 15 - Prob. 22RQCh. 15 - Prob. 23RQCh. 15 - Prob. 24RQCh. 15 - Prob. 25RQCh. 15 - Prob. 26RQCh. 15 - Prob. 27QRACh. 15 - Prob. 28QRACh. 15 - Prob. 29QRACh. 15 - You are retained by Columbia Corporation to audit...Ch. 15 - Prob. 31QRACh. 15 - Prob. 32AOQCh. 15 - Prob. 32BOQCh. 15 - Prob. 32COQCh. 15 - Prob. 32DOQCh. 15 - Prob. 32EOQCh. 15 - When a client uses paper stock certificates, an...Ch. 15 - Prob. 32GOQCh. 15 - The auditors can best verify a clients bond...Ch. 15 - Prob. 32IOQCh. 15 - All corporate capital stock transactions should...Ch. 15 - Prob. 32KOQCh. 15 - Prob. 32LOQCh. 15 - Prob. 32MOQCh. 15 - Prob. 32NOQCh. 15 - Prob. 32OOQCh. 15 - An auditor most likely would inspect loan...Ch. 15 - Prob. 32QOQCh. 15 - Match the following definitions (or partial...Ch. 15 - Prob. 34PCh. 15 - Prob. 35PCh. 15 - Prob. 36PCh. 15 - Prob. 37P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- To determine that all transactions relating to long-term debts are properly recorded, the auditor would most likely *a. Trace authorization for issuance of debt to credits to the long-term debt accountb. Recalculate interest expense and amortization of premium or discount, if any.c. Ascertain the amount of long term debt maturing within one yeard. Review minutes of BOD meetingsarrow_forwardIn the audit of bond investments classified as FA @ amortized cost, the auditor must consider that the interest recognized by the client are those interest received in cash plus accrued interest based on the face amount of the bond investments. Select one: True Falsearrow_forwardThe audit step most likely to reveal the existence of contingent liabilities is(1) a review of vouchers paid during the month following the year-end.(2) mortgage-note confirmation.(3) accounts payable confirmations.(4) an inquiry directed to legal counsel.arrow_forward
- For each of the following items, specify whether the information would most likely be found on the balance sheet, the income statement, the statement of cash flows, or in the notes to the statements. 1. The amount of a bond liability. 2. A description of any bond covenants. 3. The coupon rates associated with bond issuances. 4. Interest expense for the period. 5. The maturity dates associated with bond issuances. 6. Cash interest paid for the period. Locationarrow_forwardFor each of the following items, specify whether the information would most likely be found on the balance sheet, the income statement, the statement of cash flows, or in the notes to the statements.arrow_forwardWhich of the following provides the highest-quality evidence regarding the Valuation of recorded accounts payable? Question 5 options: Inspecting invoices for all cash disbursements during the year. Performing analytical procedures. Confirming balances with creditors and suppliers. Recalculating the balance of accounts payable.arrow_forward
- Which of the following procedures would a CPA most likely perform in planning a financial statement audit?a. Make inquiries of the client’s lawyer concerning pending litigation.b. Perform cutoff tests of cash receipts and disbursements.c. Compare financial information with nonfinancial operating data.d. Recalculate the prior-years’ accruals and deferrals.arrow_forwardWhich of the following is the best audit procedure for determining the existence of unrecorded liabilities?a. Examine confirmation requests returned by creditors whose accounts are on a subsidiary trial balance of accounts payable.b. Examine a sample of cash disbursements in the period subsequent to year-end.c. Examine a sample of invoices a few days prior to and subsequent to the year-end to ascertain whether they have been properly recorded.d. Examine unusual relationships between monthly accounts payable and recorded purchases.arrow_forwardAssume you are working in public accounting and the client you are assisting has a question on the appropriate guidance regarding the how to determine the number of periods to amortize a bond discount. What section in the codification would be appropriate to search for guidance on this issue? Question 22 options: a) Initial Measurement b) Subsequent Measurement c) Recognition d) Other Presentation Mattersarrow_forward
- The printing costs and legal fees associated with the issuance of bonds should Select one: a. be expensed when incurred. O b. be reported as a deduction from the face amount of bonds payable. c. not be reported as an expense until the period the bonds mature or are retired. d. be recorded as a reduction of the bond issue amount and then amortized over the life of the bonds.arrow_forward5) Duration analysis involves comparing the average duration of the bank's average duration of its A) securities portfolio; non-deposit liabilities B) assets; liabilities C) loan portfolio; deposit liabilities D) assets; deposit liabilities to thearrow_forwardThe bond trustee is usually a bank that is hired to represent the interests of the bondholders, making sure the terms of the bond indenture are carried out. True Falsearrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
BIG Problem with Bond Investing Today!!!; Author: Learn to Invest - Investors Grow;https://www.youtube.com/watch?v=1ScT15of0Vo;License: Standard Youtube License