During Inspection of the Stock Certificate Book, the Auditor Determines

question 22

Multiple Choice

During inspection of the stock certificate book, the auditor determines that all unissued certificates are intact. This relates primarily to the:

• A) completeness assertion.
• B) valuation or allocation assertion.
• C) existence or occurrence assertion.
• D) rights and obligations assertion.
• E) presentation or disclosure assertion.

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Definitions:

Carrying Amount

The book value of assets and liabilities on a company's balance sheet, calculated as the original cost minus any depreciation, amortization, or impairment costs.

Interest-Bearing Note

A debt instrument that specifies the amount borrowed, interest rate, and maturity date, obligating the borrower to pay interest.

Bond

A form of interest-bearing note used by corporations to borrow on a long-term basis.

Times Interest Earned Ratio

This ratio measures a company's ability to meet its debt obligations based on its current income, calculated as earnings before interest and taxes divided by interest expense.