An Auditor Is Determining Whether an Issuance of Notes Payable

question 74

Multiple Choice

An auditor is determining whether an issuance of notes payable for cash was correctly recorded.Her best course of action would be to

• A)confirm with the bond trustee as to the amount of bonds issued.
• B)confirm with the underwriter as to the appropriate market yield on the bonds.
• C)trace the cash received from the proceeds to the accounting records.
• D)verify that the amount was included in a footnote disclosure.

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Definitions:

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the normal operating cycle of a business.

Office Equipment

The machinery, tools, and furniture used in an office environment to facilitate work, such as computers, printers, and desks.

Total Quality Management (TQM)

A management approach centered on continuous improvement, focusing on quality control across all areas of an organization.

Product Leadership

A strategy that aims to build a company’s reputation for cutting-edge products and innovation, leading the market through quality and new features.