Chapter 11

In the audit of a medium-sized manufacturing concern, which one of the following areas can be expected to require the least amount of audit time?

A. Equity

An auditor usually obtains evidence of a company's equity transaction by reviewing its:

A. Minutes of board of directors meetings.

An auditor's program to audit long-term debt should include steps that require

A. examining bond trust indentures.

Most likely, an auditor's purpose in reviewing the renewal of a note payable shortly after the balance sheet date is to obtain evidence concerning management's assertions about:

B. Presentation and disclosure

When a client's company does not maintain its own stock records, the auditor should obtain written confirmation from the transfer agent and registrar concerning:

B. The number of shares issued and outstanding.

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

C. Authorization for both cash and stock dividends.

In gathering evidence to evaluate unrecorded long-term bonds payable, an auditor most likely will

C. Compare interest expense with the bond payable amount for reasonableness.

During an audit of a company's equity accounts, the auditor determines whether restrictions have been imposed on retained earnings resulting from loans, agreements, or state law. This audit procedure most likely is intended to verify management's assertion of:

D. Presentation and disclosure

In performing tests concerning the granting of stock options, auditor should:

D. Trace the authorization for the transaction to a vote of the board of directors.

During the audit of a publicly held company, the auditor should obtain written confirmation regarding debenture transactions from the:

D. Trustee.