In an Audit Test of Recorded Interest Expense and Accrued

question 12

Multiple Choice

In an audit test of recorded interest expense and accrued interest,the auditor was able to detect that the recorded interest expense was higher than the calculations showed.This may indicate

• A) A failure to accrue interest occurred.
• B) Interest payments are in default.
• C) Interest payments were charged to another account.
• D) Interest was paid on an unknown debt or unrecorded liability.

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Definitions:

Milton Friedman

An influential American economist known for his strong belief in free-market capitalism and a minimal role for government in the economy.

Free Market Ethics

Moral principles or standards governing fair and competitive practices in a market economy without undue government intervention.

Duty To Rescue

A legal or moral obligation to provide assistance to a person in danger or distress, under certain circumstances.

Pre-existing Duty

A rule in contract law that states if someone is already legally obligated to perform a certain duty, promising to perform that same duty does not constitute a valid consideration for a new contract.