During the Year Under Audit,a Company Has Completed a Private

question 22

Multiple Choice

During the year under audit,a company has completed a private placement of a substantial amount of bonds.Which of the following is the most important step in the auditor's program for the audit of bonds payable?

• A) Confirming the interest rate with the bond trustee.
• B) Tracing the cash received from the issue to the accounting records.
• C) Examining the bond agreement for a sinking fund provision.
• D) Recomputing the annual interest cost and the effective yield.

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Definitions:

Counteroffer

A proposal made in response to an original offer, modifying its terms and conditions, which effectively rejects the initial offer.

Material Term

A significant provision in a contract that notably affects the rights and obligations of the parties involved.

Elements of Offer

The criteria that must be met for a proposal to be considered a valid offer in contract law, typically including intent, definiteness, and communication to the offeree.

Revocation Exceptions

Specific circumstances under which the withdrawal or cancellation of an offer, right, or privilege is not permitted.