16. Several years ago, Conway, Inc., secured a conventional real estate mortgage loan.Which of the following audit procedures would least likely be performed by an auditor examining the mortgage balance?
A. Examine the current year's canceled checks.
B. Review the mortgage amortization schedule.
C. Inspect public records of lien balances.
D. Recompute mortgage interest expense.
18. A control which ensures that long-term borrowing is properly initiated by appropriate individuals addresses the control assertion of
19. The primary reason for preparing a reconciliation between interest-bearing obligations outstanding during the year and interest expense presented in the financial statements is to
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.
20. The auditor's program for the examination of long-term debt should include steps that require the
A. Verification of the existence of the bond holders.
B. Examination of any bond agreement.
C. Inspection of the accounts payable subsidiary ledger.
D. Investigation of credits to the bond interest income account.
21. Valuation and allocation is most likely an issue for long-term debt if
A. Bonds are sold on the open market.
B. Bonds are issued at a discount or premium.
C. The loans are from banks.
D. The company has many short-term leases.
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