Questions from Auditing and Assurance

Q: Your new client, Black Angus Valley Ranch, is a small

Your new client, Black Angus Valley Ranch, is a small corporation with fewer than 100 stockholders. It does not utilize the services of an independent stock registrar or transfer agent. For your first...

Q: Long-term creditors often insist upon placing certain restrictions upon the

Long-term creditors often insist upon placing certain restrictions upon the borrowing company for the term of the loan. Give three examples of such restrictions, and indicate how each restriction prot...

Q: Corporations sometimes issue their own capital stock in exchange for services and

Corporations sometimes issue their own capital stock in exchange for services and various assets other than cash. As an auditor, what evidence would you look for to determine the propriety of the valu...

Q: In your second annual audit of a corporate client, you find

In your second annual audit of a corporate client, you find a new account in the general ledger called Treasury Stock, which has a balance of $306,000. Describe the procedures you would follow to veri...

Q: In auditing the financial statements of Foster Company, you observe a

In auditing the financial statements of Foster Company, you observe a debit entry for $200,000 labeled as Dividends in the Retained Earnings account. Explain in detail how you would verify this entry....

Q: What relationship exists between the expected population deviation rate and sample size

What relationship exists between the expected population deviation rate and sample size?

Q: Name three situations that might place a restriction on retained earnings,

Name three situations that might place a restriction on retained earnings, limiting or preventing dividend payments. Explain how the auditors might become aware of each such restricting factor.

Q: Comment on the desirability of audit work on the owners’ equity accounts

Comment on the desirability of audit work on the owners’ equity accounts before the balance sheet date.

Q: Delta Company has issued stock options to four of its officers,

Delta Company has issued stock options to four of its officers, permitting them to purchase 5,000 shares each of common stock at a price of $25 per share at any time during the next five years. The pr...

Q: What errors are commonly encountered by the auditors in their examination of

What errors are commonly encountered by the auditors in their examination of the capital and drawing accounts of a sole proprietor?