Questions from Auditing and Assurance

Q: An entity has established a bond sinking fund to repurchase a portion

An entity has established a bond sinking fund to repurchase a portion of the outstanding bonds each year. The auditor can best verify the entity’s bond sinking fund transactions and year-end bond bala...

Q: When an entity does not maintain its own stock records, the

When an entity does not maintain its own stock records, the auditor should obtain written confirmation from the transfer agent and registrar concerning a. Restrictions on the payment of dividends. b....

Q: The primary responsibility of a bank acting as a registrar of capital

The primary responsibility of a bank acting as a registrar of capital stock is to a. Ascertain that dividends declared do not exceed the statutory amount allowable in the state of incorporation. b. Ac...

Q: To obtain evidence on the authorization assertion, an auditor should trace

To obtain evidence on the authorization assertion, an auditor should trace corporate stock issuances and treasury stock transactions to the a. Numbered stock certificates. b. Articles of incorporation...

Q: Although the quantity and content of audit working papers vary with each

Although the quantity and content of audit working papers vary with each particular engagement, an auditor’s permanent files most likely include a. Schedules that support the current year’s adjusting...

Q: An auditor compares the current-year revenues and expenses with those

An auditor compares the current-year revenues and expenses with those of the prior year and investigates all changes exceeding 5 percent. By this procedure, the auditor would be most likely to learn t...

Q: Visit the SEC’s website (www.sec.gov), and

Visit the SEC’s website (www.sec.gov), and identify a company that has been recently cited for problems related to property, plant, and equipment or lease accounting (e.g., in years past, many retail...

Q: The tick mark ⧫ most likely indicates that the amount was traced

The tick mark ⧫ most likely indicates that the amount was traced to the a. December cash disbursements journal. b. Outstanding check list of the applicable bank reconciliation. c. January cash disburs...

Q: Over the past 10 years it has become quite common for an

Over the past 10 years it has become quite common for an accounting firm to withdraw its opinion on a set of previously issued financial statements. Search the Internet to find a recent example of a c...

Q: An auditor ordinarily sends a standard confirmation request to all banks with

An auditor ordinarily sends a standard confirmation request to all banks with which the entity has done business during the year under audit, regardless of the year-end balance. One purpose of this pr...