The Audit Objective to Determine That Notes Payable in the Schedule

question 18

Multiple Choice

The audit objective to determine that notes payable in the schedule exist is verified by the tests of balances procedure to

• A)foot the notes payable list.
• B)confirm notes payable.
• C)recalculate interest expense.
• D)examine the balance sheet for proper disclosure of noncurrent portions.

---

Definitions:

Nontaxable Life Insurance

A type of life insurance policy where the proceeds paid on death or the cash value accumulation during the policyholder's lifetime are not subject to income taxes.

Warranty Expenses

Costs associated with the obligation to repair, replace, or remediate goods that have not met the selling criteria or customer expectations.

Pretax Financial Income

Income calculated before taxes are applied, representing a company's earnings based solely on its operations and other financial activities.

Income Taxes Payable

The amount of income taxes that a company has accrued but has not yet paid to the tax authority.