A) Minutes of board of directors meetings.
B) Registrar's record of interbank transfers.
C) Canceled stock certificates.
D) Treasury stock certificate book.
A) Canceled (generally by perforation) and attached to the certificate book.
B) Destroyed to prevent fraudulent reissuance.
C) Retained by the selling shareholder.
D) Sent to the state's registrar of investment securities.
A) Perform analytical procedures on the bond prenumbered discount accounts.
B) Examine documentation of assets purchased with bond proceeds for liens.
C) Compare interest expense with the long-term debt amount for reasonableness.
D) Confirm the existence of individual long-term debt holders at year-end.
A) Comparing the book value of the debt to its year-end market value.
B) Vouching borrowing and repayment transactions.
C) Verifying the proper presentation of the debt through the use of confirmations.
Inspecting the accounts payable subsidiary ledger for unrecorded interest-bearing debt.
A) A small, nonpublic company.
B) A large, publicly traded company.
C) All companies must use this type of system.
D) No companies use this system anymore.
A) Individual holders of retired bonds.
B) Recomputation procedures performed using interest expense.
C) The bond trustee.
D) Comparisons of retired bonds with those outstanding.
A) The company utilizes the services of a bond trustee.
B) The company segregates approval from issuance of the bonds.
C) Bonds are countersigned by two officers.
D) Bonds are serially numbered.
A) Establish the completeness of recorded interest-bearing debt.
B) Establish the legality of outstanding debt.
C) Determine that debt is properly valued.
) Determine that the presentation and disclosure of interest-bearing debt is appropriate.
A) Examine all outstanding stock certificates for completeness.
B) Account for the proceeds from stock issues.
C) Reconcile shares outstanding with the general ledger.
D) Evaluate compliance with stock option plans.
A) List of audit objectives.
B) Decision table.
C) Summary of tests of controls.
D) Internal control questionnaire.
A) Accounts receivable.
B) Accounts payable.
C) Notes payable.
A) Confirmation with shareholders.
B) Inspection of certificates.
C) Inspection of cash receipts entries.
D) Recomputation of all gains and losses.
A) Copied and placed on the owners' equity lead schedule.
B) Copied and placed in the permanent file.
C) Confirmed with the transfer agent.
Ignored since they are not normally considered to be related to the internal control structure.
A) Stock certificates are prenumbered.
B) Stock certificates are signed immediately upon receipt from the printer.
C) Stock certificates are in the exclusive custody of a responsible officer.
D) Stock certificates require the signature of two officers.
A) The board of directors.
B) The audit committee.
C) The stockholders.
D) The president.
B) Existence or occurrence.
C) Valuation or allocation.
D) Presentation and disclosure.
A) Verification of the existence of the bondholders.
B) Examination of any bond trust indenture.
C) Inspection of the accounts payable subsidiary ledger.
D) Investigation of credits to the bond interest income accounts.
A) Total shares of stock issued.
B) Restrictions on the payment of dividends.
C) Total market value of outstanding shares of stock.
D) Gains from sale of treasury stock.
A) Analysis of capital stock accounts.
B) Confirmation of shares issued with the independent registrar.
C) Accounting for the proceeds of major stock issues.
D) Reconciliation of a stock certificate book with the general ledger.D) Reconciliation of a stock certificate book with the general ledger.
A) Determine that dividends paid do not exceed the amount allowable by law.
B) Act as an independent third party between the board of directors and outside
C) Avoid any overissuance of stock.
Maintain detailed stockholder records and carrying out transfers of stock ownership.
A) Debenture holders.
B) Client's attorney.
C) Internal auditors.
A) Evaluate internal control over securities.
B) Determine the validity of prepaid interest expense.
C) Ascertain the reasonableness of imputed interest.
D) Detect unrecorded liabilities.
A) Confirmation with individual holders of retired bonds.
B) Confirmation with the bond trustee.
Recomputation of interest expense, interest payable, and amortization of bond discount or premium.
D) Examination and count of the bonds retired during the year.
A) Be defaced to prevent reissuance and attached to their corresponding stubs.
B) Not be defaced but segregated from other stock.
C) Be destroyed to prevent fraudulent reissuance.
D) Be defaced and sent to the Secretary of State.
A) Confirm the existence of the bondholders.
B) Review the minutes for authorization.
C) Trace the net cash received from the issuance to the bond revenue account.
D) Inspect the records maintained by the bond trustee.
A) An estimate of the dollar amount of the probable loss.
B) An expert opinion as to whether a loss is possible, probable or remote.
C) Information concerning the progress of cases to date.
D) Corroborative evidential matter.
A) Numbered stock certificates.
B) Articles of incorporation.
C) Transfer agent's records.
D) Minutes of the board of directors.
Market value used to charge retained earnings to account for a two-for-one stock split.
) Approval of the adjustment to the beginning balance as a result of a write-down of an account receivable.
C) Authorization for both cash and stock dividends.
D) Gain or loss resulting from disposition of treasury shares.