Which of the Following Questions Is an Auditor Most Likely

question 6

Multiple Choice

Which of the following questions is an auditor most likely to include on an internal control questionnaire for notes and loans payable?

• A)Are the assets that secure notes payable critically needed for the entity's continued existence?
• B)Are two or more authorized signatures required on cheques that repay notes payable?
• C)Are the proceeds from notes payable used for the purchase of non-current assets?
• D)Are direct borrowings on notes payable authorized by the board of directors?

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Definitions:

Written Amount

The numerical representation of value or money in written form within a document.

Certificate of Deposit

A bank-issued financial instrument that offers a fixed interest rate over a specified period of time.

Note

A written promise to pay a specified amount of money at a given time or on demand.

Distinguish

To recognize or treat as different in some respect due to distinct characteristics or features.