The Auditor Can Best Verify an Entity's Bond Sinking Fund

question 31

Multiple Choice

The auditor can best verify an entity's bond sinking fund transactions and year-end balance by:

• A)recomputation of interest expense, interest payable, and amortization of bond discount or premium.
• B)confirmation with individual holders of retired bonds.
• C)confirmation with the bond trustee.
• D)examination and count of the bonds retired during the year.

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Definitions:

Cash Receipts

The collection of money, typically currency or checks, received by a business during its operating activities.

Cash Payments

Transactions that involve the outflow of cash to settle obligations or purchase items.

Ski Jackets

A type of outerwear designed for protecting the body from cold temperatures and snow, especially during skiing.

Budgeted Cost

An estimated expense for various activities or projects, predetermined during the budgeting process.