24. An entity's internal control requires for every check request that there be an approved voucher, supported by a prenumbered purchase order and a prenumbered receiving report. To determine whether checks are being issued for unauthorized expenditures, an auditor most likely would select items for testing from the population of all *

a. Purchase orders.

b. Canceled checks

c. Receiving reports.

d. Approved vouchers.

25. Which of the following procedures would an auditor most likely perform in searching for unrecorded liabilities? *

a. Trace a sample of accounts payable entries recorded just before year-end to the unmatched receiving report file.

b. Compare a sample of purchase orders issued just after year-end with the year-end accounts payable trial balance.

c. Vouch a sample of cash disbursements recorded just after-year end with year-end accounts payable trial balance.

d. Scan the cash disbursements entries recorded just before year-end for indications of unusual transactions.

26. In auditing long-term bonds payable, an auditor most likely would *

a. Perform analytical procedures on the bond premium and discount accounts.

b. Examine documentation of assets purchased with bond proceeds for liens.

c. Compare interest expense with the bond payable for reasonableness.

d. Confirm the existence of individual bond holders at year-end.

27. An auditor's purpose in reviewing the renewal of a note payable shortly after the end of the reporting period most likely is to obtain evidence concerning management's assertion about *

a. Presentation and disclosure

b. Completeness

c. Existence

d. Valuation and allocation

28. Which of the following statements is correct? *

a. An independent auditor should determine that the company officers authorized the issuance of the stock dividend.

b. An independent auditory should determine that the stock dividend was properly recorded by a memorandum entry only.

c. An independent auditor should determine that the stock dividend was recorded by transferring appropriate amounts from retained earnings to share capital and share premium.

d. When a company declared and paid stock dividend, an independent auditor should determine that shareholders received their additional shares by confirming year-end holding with them.

29. Which of the following statements is correct? *

a. When a company has treasury share certificate on hand, a year-end count of the certificates by the auditor is always required.

b. When a company has treasury share certificates on hand, a year-end count of the certificates by the auditor is required when the company classifies treasury shares with other assets.

c. When a company has treasury share certificates on hand, a year-end count of the certificates by the auditor is not required if the treasury share is a deduction from shareholder's equity.

d. When a company has treasury share certificates on hand, a year-end count of the certificates by the auditor is required when the company had treasury share transactions during the year.

30. An audit program for the audit of retained earnings account should include a step that requires verification of *

a. Market value used to charge retained earnings to account for a 2-for-1 stock split.

b. Approval of the adjustment to the beginning balance as a result of a write-down of an accounts receivable.

c. Authorization of both cash and stock dividends.

d. Gain or loss resulting from disposition of treasury shares.

31. Where no independent stock transfer agents are employed and the corporation issues its own stocks and maintains stock records, canceled stock certificate should *

a. Be defaced and sent to the secretary of finance.

b. Be defaced to prevent issuance and attached to their corresponding stubs.

c. Be destroyed to prevent fraudulent reissuance.

d. Not be defaced, but segregated from other stock certificates and retained in a cancelled certificates file.

32. The primary responsibility of a bank acting as registrar of capital stock is to *

a. Ascertain that dividends declared do not exceed the statutory amount allowable in the state of incorporation.

b. Account for stock certificates by comparing the total shares outstanding to the total in the shareholders subsidiary ledger.

c. Act as an independent third party between the board of directors and outside investors concerning mergers, acquisitions and the sale of treasury stock.

d. Verify that stock issued in accordance with the authorization of the board of directors and the articles of incorporation.