When There Are Not Numerous Transactions Involving Notes Payable During

question 49

Multiple Choice

When there are not numerous transactions involving notes payable during the year, the normal starting point for the audit of notes payable is

• A) a schedule of notes payable and accrued interest prepared by the audit team.
• B) a schedule of notes payable and accrued interest obtained from the client.
• C) a schedule of only those notes with unpaid balances at the end of the year prepared by the client.
• D) the notes payable account in the general ledger.

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Definitions:

Days' Sales in Inventory

A financial metric that shows the average number of days a company takes to turn its inventory into sales.

Dividend Yield

A ratio demonstrating how much a company disburses in dividends annually in comparison to its stock price.

Total Asset Turnover

A financial ratio that measures the efficiency of a company in using its assets to generate sales revenue, calculated by dividing sales by total assets.

Inventory Turnover

A financial ratio indicating the number of times a company's inventory is sold and replaced over a period.