In Connection with the Audit of an Issue of Long-Term

question 91

Multiple Choice

In connection with the audit of an issue of long-term bonds payable, the audit team should:

• A)determine whether bondholders are persons other than owners, directors, or officers of the company issuing the bond.
• B)calculate the effective interest rate to see if it is substantially the same as the rates for similar issues.
• C)decide whether the bond issue was made without violating state or local law.
• D)ascertain that the client has obtained the opinion of counsel on the legality of the issue.

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Definitions:

Social constitution

The way in which a society is organized, including its social structures, norms, and institutions, and how they interact to shape the behavior and attitudes of its members.

Political economy

A branch of social science that studies the relationships between individuals and society and between markets and the state, using methods from both economics and political science.

Market capitalism

An economic system where decisions and investments are determined by the market, with goods and services produced and exchanged according to demand and supply.

Social welfare programs

Government-provided services designed to ensure a basic standard of living for all citizens, including healthcare, education, and income assistance.