In the Audit of Loans Payable, It Is Common to Include

question 66

Multiple Choice

In the audit of loans payable, it is common to include tests of principal and interest payments as a part of the audit of the acquisitions and payment cycle, because the payments are in the cash payments journal that is being sampled.It is also normal to test these transactions as part of the capital acquisitions and repayment cycle, because:

• A) due to the infrequency of these transactions, in many cases no transactions involving loans payable are included in the sample tests of acquisitions and payments.
• B) it is not unusual for the auditor to duplicate a process, thereby gathering a larger quantity of evidence.
• C) the tests done in the acquisitions and payments cycle will look only at the cash credit side, so the tests done in the capital acquisitions and repayment cycle will look at the debit side of the transaction.
• D) replicating the evidence will provide the auditor with a higher level of assurance.

Calculate taxable income after applying withholding allowances for the employee and dependents.

Calculate taxable income after accounting for withholding allowances.

Compute net pay by deducting taxes and other deductions from gross earnings.

Determine the total withholding allowance for an individual with dependents.

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Definitions:

Parents

Caregivers of offspring in their own species; in humans, they typically provide support, education, love, and guidance to their children.

Foster Development

To support and encourage the growth, progress, or formation of something, often used in relation to educational, psychological or physical development.

Favorable Self-image

A positive perception or evaluation of oneself, reflecting a person’s beliefs about their own abilities, appearance, and value.

Authoritative

A parenting style characterized by high responsiveness and high demands, where parents set clear standards while being emotionally supportive.