1. One plausible reason that the mortgage loan has a lower interest rate than the Bank Two note payable is                             

a.            Interest rates decreased after the mortgage loan was taken

b.            The mortgage loan is probably unsecured

c.             Mortgage loans are paid off over a longer period than notes

d.            The mortgage loan collateral reduces the banks risk of loss

2. WP 11 Explanation of audit legends includes tick marks E and W. The documentation referred to in tick marks E and W might include all of the following except

a.            Vendors' invoices

b.            Purchase orders

c.             Credit approval for vendors

d.            Receiving reports

e.            Correspondence with vendors

3. Janel James, Brony’s Bikes’ plant assets accountant, miscalculated the accumulated depreciation on the assets sold and thereby overstated the gain on disposal by $3,090,000. Audit Adjustment #10 should include

a.            A 3,090,000 credit to Factory Equipment

b.            A 3,090,000 credit to Accumulated Depreciation

c.             A 9,100,000 debit to Gain/Loss on Disposal

d.            A 9,100,000 credit to Gain/Loss on Disposal

4. File 20X9 MUS.xlxs WP 11.3 includes Audit Adjustment #1. That amount should be entered into file 20X9 plant.xlxs because

a.            It forms part of the Factory Equipment 20X9 audited balance

b.            Accumulated depreciation would be misstated without it

c.             The gain/loss on disposal would be misstated without it

d.            Cash would be misstated without it

Answer rating: 100% (QA)

1 d The mortgage loan collateral reduces ... View the full answer