In Connection with the Audit of an Issue of Long-Term

question 91

Multiple Choice

In connection with the audit of an issue of long-term bonds payable, the audit team should:

• A)determine whether bondholders are persons other than owners, directors, or officers of the company issuing the bond.
• B)calculate the effective interest rate to see if it is substantially the same as the rates for similar issues.
• C)decide whether the bond issue was made without violating state or local law.
• D)ascertain that the client has obtained the opinion of counsel on the legality of the issue.

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Definitions:

Master Budget

A comprehensive financial plan that consolidates various detailed budgets within a company for a specific period.

Production Budget

A financial plan that estimates the number of units that must be produced within a specific time period to meet expected sales demand and inventory levels.

Sales Budget

A sales budget is an estimated amount of revenue that a company expects to earn from sales over a specific period.

Master Budget

A master budget is a comprehensive financial planning document that consolidates all of the individual budgets of a company's departments into one single plan for a specific period.