The Auditor Can Best Verify a Client's Bond Sinking Fund

question 37

Multiple Choice

The auditor can best verify a client's bond sinking fund transactions and year-end balance by:

• A)Confirmation with individual holders of retired bonds.
• B)Confirmation with the bond trustee.
• C)Recomputation of interest expense,interest payable,and amortization of bond discount or premium.
• D)Examination and count of the bonds retired during the year.

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Definitions:

Indirect Materials

Materials used in the production process but cannot be directly traced to the final product; often considered part of manufacturing overhead.

Indirect Labor

Labor costs associated with employees who do not directly contribute to the production of goods or services but support the production process, such as maintenance staff or supervisors.

Direct Materials

Raw materials that can be directly attributed to the production of a good or service.

Direct Labor

Refers to the wages and other costs for labor directly involved in the production of goods or services.