Internal Controls That Are Likely to Prevent the Client from Including

question 81

Multiple Choice

Internal controls that are likely to prevent the client from including as a business expense those transactions that primarily benefit management or other employees rather than the entity being audited satisfy the control objective that:

• A)acquisitions are correctly valued.
• B)existing acquisitions are recorded.
• C)acquisitions are correctly classified.
• D)recorded acquisitions are for goods and services received.

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Definitions:

Noncallable Bond

A type of bond that cannot be redeemed by the issuer before its maturity date, thus offering investors protection against early repayment risks.

Annual Coupon

The yearly interest payment made to bondholders, expressed as a percentage of the bond's face value.

Bond-Yield-Plus-Risk-Premium

A method of estimating the cost of equity by adding a risk premium to the observed yield of a company’s long-term debt.

WACC

An assessment of a firm's cost of capital, where each category of capital is proportionally weighted to calculate the average cost.