Which of the Following Questions Would an Auditor Most Likely

question 400

Multiple Choice

Which of the following questions would an auditor most likely include on an internal control questionnaire for notes payable?

• A) Are assets that collateralize notes payable critically needed for the entity's continued existence?
• B) Are two or more authorized signatures required on checks that repay notes payable?
• C) Are the proceeds from notes payable used for the purchase of noncurrent assets?
• D) Are direct borrowings on notes payable authorized by the board of directors?

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Definitions:

Amortization

The process of gradually writing off the initial cost of an intangible asset over its useful life.

Face Value

The original cost of a security as stated on the certificate. It is the amount repaid to the holder at maturity but not necessarily its current market value.

Intra-Entity Inventory Transfers

Transactions involving the transfer of inventory between departments or units within the same company.

Consolidation Worksheet

An instrument utilized for compiling consolidated financial reports, which facilitates the integration of financial data from a parent company and its subsidiary entities.