Exam 17: Auditing the Investing and

Earnings per share is calculated as:

The disclosure committee would not ordinarily:

The substantive test of inspecting plant asset additions is categorized under:

When bond interest coupons are involved, the auditor can examine the canceled coupons and reconcile them to the amount received.

The audit significance of the financial ratio, return on common equity is:

Listed below are five assertion categories coded by the letters A through E. -The entity owns or has rights to all recorded plant assets at the balance sheet date.

The specific account balance audit objective, plant assets are stated at cost less accumulated depreciation, relates to the:

The auditor usually wants to obtain answers to what three questions when auditing investing and financing activities?

Inherent risk assessments for assertions pertaining to stockholders' equity balances depend on the nature and frequency of transactions affecting the accounts.

Inherent risk related to the existence assertion is often low because fixed assets are not vulnerable to theft.

Each change in a capital stock account should be vouched to supporting documentation.

You have been assigned to the examination of the capital stock of B Company. As a result of your review of changes in the account for the year, you have identified the following transactions: 1.Cancellation of treasury stock. 2.Issuance of a 5% stock dividend. 3.Issuance of capital stock in exchange for land wanted as a site for possible future expansion. 4.Issuance of ten shares of $25 par common stock having a market price of $125 per share in exchange for a $1,000 convertible bond. REQUIRED: State the audit procedures you would use to gather evidence in support of the propriety of the above transactions.

Listed below are five assertion categories coded by the letters A through E. -Plant asset balances include the effects of all applicable transactions for the period.

Analytical procedures risk for presentation and disclosure should always be assessed at maximum for both investing and financing cycles.

The specific financing cycle audit objective, all recorded long-term debt balances are obligations of the reporting entity, relates to the:

The specific financing cycle audit objective, long-term debt and related income statement balances and stockholders' equity balances are properly identified and classified in the financial statements, relates to the:

Return on common stockholders' equity is calculated as:

The interesting-bearing debt to total assets ratio is calculated as interest-bearing debt divided by total assets.

Consistency involves a determination of whether the company's criteria for distinguishing between capital and revenue expenditures are the same as in the prior year.

Listed below are five assertion categories coded by the letters A through E. -All terms, covenants, commitments, and retirement provisions pertaining to long-term debt are adequately disclosed.