The Auditors' Program for the Examination of Long-Term Debt Should

question 12

Multiple Choice

The auditors' program for the examination of long-term debt should include steps that require the:

• A) Verification of the existence of the bondholders.
• B) Examination of any bond trust indenture.
• C) Inspection of the accounts payable subsidiary ledger.
• D) Investigation of credits to the bond interest income accounts.

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Definitions:

Net 45

A term indicating that payment is due 45 days after the invoice date.

Average Collection Period

The average number of days that it takes for a business to receive payments owed by its customers, calculated by dividing the accounts receivable balance by the average daily sales.

Credit Terms

The conditions under which a seller will extend credit to a buyer, including the repayment period, discount for early payment, and the rate of interest if applicable.

Discount

A reduction applied to the usual cost of goods or services or the process of determining the present value of future cash flows.