In the Audit of Notes Payable, an Auditor Testing the ASB

question 39

Multiple Choice

In the audit of notes payable, an auditor testing the ASB balance assertion of accuracy and valuation most likely would:

• A)read directors' and finance committee's minutes for authorization of financing transactions.
• B)select a sample of paid notes and trace interest expense to the general ledger account.
• C)select a sample of paid notes and recalculate interest expense for the period under audit.
• D)select a sample of notes payable and vouch cash receipt to the bank statement.

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Definitions:

Marginal Utility

The additional utility derived from consuming one more unit of some good or service.

Consumer Surplus

The difference between the amount consumers are willing to pay for a good or service versus what they actually pay.

Demand Curve

A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at various prices.

Consumer Surplus

The difference between the total amount that consumers are willing to pay for a good or service and the total amount they actually pay.