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:

Perceptual Process

The sequence of steps that involves receiving, selecting, organizing, interpreting, and responding to sensory information.

Social Learning Theory

A theory that posits individuals learn behaviors, norms, and values by observing and imitating the actions of others.

Continuous Reinforcement

A method of learning that involves providing a reward or positive outcome every time a desired behavior is performed.

Categorical Thinking

involves organizing or classifying information and experiences into categories to simplify and speed up the decision-making process.