QUESTION 56

1. In performing analytical procedure over debt interest, the auditor finds company reported interest expense is materially higher than the auditors expectations. The most likely conclusion for the auditor would be that the company has not

   	a.	recorded interest bearing debt in its records.
   	b.	recorded paid or accrued all interest expense.
   	c.	properly accounted for the discount of bonds payable account.
   	d.	properly recorded interest income.

2 points

QUESTION 57

1. Which of the following balance-related audit objectives is not applicable to the audit of notes payable?

   	a.	realizable value
   	b.	detail tie-in
   	c.	cutoff
   	d.	classification

2 points

QUESTION 58

1. Which of the following are financial misstatement risks within the acquisition and repayment cycle and associated accounts.

   	a.	Misstatement of dividends declared on balance sheet or payment to the wrong people which could result in a liability.
   	b.	Illegal payments of cash and issue of shares.
   	c.	Misstatement of owners equity and earnings per share.
   	d.	All of the above

2 points

QUESTION 59

1. An auditor has been assigned the objective to determine if there were any shares issued or retired during the year, or if certificates are missing. What specific misstatement would this audit objective uncover?

   	a.	Unrecorded or unauthorized transactions, or transactions not handled in a legal manner.
   	b.	The issuance or retirement of stock without proper authorization, improper valuation, or incorrect dividend calculations.
   	c.	Incorrect earnings per share computation.
   	d.	All of the above

2 points

QUESTION 60

1. The regular reconciliation of bank accounts by an independent person is an important internal control over cash balances because it provides an opportunity for ______________

   	a.	verification of the cash receipts and cash disbursements transactions.
   	b.	investigation of reconciling items.
   	c.	verification of the ending cash balance.
   	d.	All of the above

2 points

QUESTION 61

1. Auditors frequently design audit procedures to detect existence of fraud in cash cycle. Which of the following is an example of fraud detection audit procedure?

   	a.	surprise count of the cash and customers checks on hand to detect lapping fraud.
   	b.	testing internal controls for proper preparation and review of cash.
   	c.	obtain bank confirmations to detect kiting.
   	d.	detail review of the bank reconciliations, specifically focusing on reconciling items to detect misappropriation.