In Auditing for Unrecorded Long-Term Bonds Payable, an Audit Team

question 36

Multiple Choice

In auditing for unrecorded long-term bonds payable, an audit team most likely will:

• A)perform analytical procedures on the bond premium and discount accounts.
• B)examine documentation of assets purchased with bond proceeds for liens.
• C)compare interest expense with the bond payable amount for reasonableness.
• D)confirm the existence of individual bondholders at year-end.

---

Definitions:

Wash Sale Rules

IRS regulations that disallow the claim of a capital loss for tax purposes if a substantially identical security is purchased within 30 days before or after the sale.

Loss Disallowed

A financial loss that cannot be deducted from taxable income as per tax regulations, often due to specific restrictions or limitations.

Personal Residence

The primary dwelling in which a person lives, often eligible for certain tax benefits, like the deduction of mortgage interest and property taxes.

Gain Recognize

Gain Recognize refers to the process of reporting the profit earned from the sale of an asset for tax purposes.