Deck 11: Long-Term Debt and Owners Equity Business Process

Question 1

The auditor must determine whether the long-term debt and owner's equity process transactions recorded in the expense accounts during the year

A)have been properly recorded in accordance with GAAS
B)have been recorded in accordance with an applicable financial reporting framework
C)are capable of being transferred to the owners equity account
D)have comparable transactions on the balance sheet

Answer 1

B

Question 2

The long-term debt and owner's equity business process involves only balance sheet accounts.

Answer 2

False

Question 3

The tests used by an auditor to gather evidence relating to long-term debt and owner's equity income statement transactions are called

A)tests of controls
B)substantive tests of transactions
C)substantive test of balances
D)analytical procedures

Answer 3

B

Question 4

When management hands the financial statements to the auditor,management asserts that the accounts in the process are current,accurate,and complete.

Question 5

The tests used by an auditor to gather evidence relating to long-term debt and owner's equity balance sheet transactions are called

A)tests of controls
B)substantive tests of transactions
C)substantive test of balances
D)analytical procedures

Question 6

According to FASB Concept Statement No.5,Recognition and Measurement in Financial Statements of Business Enterprises,long-term liabilities are reported at the present value of the future cash outflows which will satisfy the payment of the liability.

Question 7

The totals at the end of the year in the long-term debt and owner's equity process expense accounts reflect

A)all the business conducted during the year
B)only the transactions completed during the year
C)all the transactions recorded during the year
D)only the transactions initiated during the year

Question 8

On the income statement,the long-term debt and owner's equity process includes

A)interest expense accounts
B)gains and losses on the purchase of investments
C)interest and dividends
D)all long-term debt and owner's equity accounts

Question 9

The totals in the long-term debt and owner's equity process balance sheet accounts reflect

A)all the transactions recorded during the year
B)a beginning balance as of the last day of the current year
C)only the amounts in the accounts on the last day of the year
D)the total amount of the transactions recorded during the year

Question 10

The auditor is responsible,in the long-term debt and owner's equity process,for determining

A)only if the ending balance in the balance sheet account is stated in accordance with generally accepted accounting principles
B)only if the ending balances in the income statement account is stated in accordance with generally accepted accounting principles
C)only if the beginning balances in the balance sheet account is stated in accordance with generally accepted accounting principles
D)only if the beginning balances in the income statement account is stated in accordance with generally accepted accounting principles

Question 11

The documents in the long-term debt and owner's equity business process include

A)bond agreement
B)note receivable agreement
C)depreciation table for long-term debt agreements
D)stock register or stock certificate book
E)adjusting journal evaluation report
F)both A and D
G)both B and C
H)both D and E

Question 12

Management makes the decision to design internal controls to prevent or detect misstatements in the financial statements based on whether the dollar amount of the balances in this process justifies the use of internal controls.

Question 13

On the balance sheet,the long-term debt and owner's equity process includes

A)interest expense accounts
B)gains and losses on the purchase of investments
C)interest and dividends
D)all long-term debt and owner's equity accounts

Question 14

The auditor is likely to review all transactions in the long-term debt and owner's equity process because

A)there is usually only a few transactions in this account
B)some transactions are likely to be significant in determining the ending balance
C)each transaction is likely to be significant in determining the ending balance
D)most transactions are likely to be insignificant in determining the ending balance

Question 15

Which of the following are correct for journal entries in the long-term debt and owner's equity process?

A)asset accounts or expense accounts are decreased when a liability is recorded or stock is issued
B)asset accounts or expense accounts are increased when a liability is recorded or stock is issued
C)cash is increased when the liability is paid off or dividends are paid
D)cash is decreased when the liability is paid off or dividends are paid
E)cash is decreased when the liability is paid off or stock is issued
F)both A and B
G)both B and D
H)both C and E

Question 16

For the long-term debt and owner's equity process,management asserts that long-term debt and owner's equity exist at the balance sheet date and that transactions recorded for the long-term debt and owner's equity process occurred during the year.

Question 17

Understatement errors are far more likely to occur in the long-term debt and owner's equity process than overstatement errors.

Question 18

When using analytical procedures,the auditor considers only financial measures in the evaluation of changes from one year to the next.

Question 19

Because the most likely misstatement in the long-term debt and owner's equity process are understatement errors,completeness is often the relevant assertion for this process.

Question 20

Asset accounts or expense accounts are increased when a liability is recorded or stock is issued.

Question 21

The standards require that comprehensive income information related to the transactions be disclosed in owner's equity.These items include

A)net gains recognized as net periodic pension cost for pension liabilities
B)foreign currency income adjustments
C)net losses not yet recognized as net periodic pension cost for pension liabilities
D)unrealized holding gains and losses on available-for-sale securities
E)unrealized holding gains and losses on trading securities
F)both A and B
G)both B and C
Both C and D

Question 22

The documents in the long-term debt and owner's equity business process include

A)cash agreement
B)note receivable agreement
C)amortization table for long-term debt agreements
D)bond register or bond certificate book
E)adjusting journal entry report
F)both A and B
G)both C and E
H)both D and E

Question 23

A company incurs most liabilities

A)in investing when the company obtains the resources it needs to do business
B)in transactions when the company obtains the revenues from doing business
C)in transactions when the company incurs the expenses from doing business
D)in transactions when the company obtains the resources it needs to do business

Question 24

The documents in the long-term debt and owner's equity business process include

A)cash agreement
B)note receivable agreement
C)amortization table for long-term debt agreements
D)stock register or stock certificate book
E)adjusting journal entry evaluation
F)both A and B
G)both C and D
H)both D and E

Question 25

According to FASB Concept Statement No.5,Recognition and Measurement in Financial Statements of Business Enterprises,long-term liabilities are reported

A)at the present value of the future cash inflows which will satisfy the collection of the liability
B)at the present value of the current cash outflows which will satisfy the payment of the liability
C)at the present value of the current cash inflows which will satisfy the collection of the liability
D)at the present value of the future cash outflows which will satisfy the payment of the liability

Question 26

The standards require that comprehensive income information related to the transactions be disclosed in owner's equity.These items include

A)net gains recognized as net periodic pension cost for pension liabilities
B)foreign currency translation adjustments
C)net losses not yet recognized as net periodic pension cost for pension liabilities
D)realized holding gains and losses on available-for-sale securities
E)unrealized holding gains and losses on trading securities
F)both B and C
G)both C and E
H)both D and E

Question 27

The standards require that comprehensive income information related to the transactions be disclosed in owner's equity.These items include

A)net gains recognized as net periodic pension cost for pension liabilities
B)foreign currency translation adjustments
C)net losses recognized as net periodic pension cost for pension liabilities
D)unrealized holding gains and losses on available-for-sale securities
E)unrealized holding gains and losses on trading securities
F)both A and C
G)both B and D
H)both D and E

Question 28

Interest expense on the liability is recognized

A)as time passes on the unpaid portion of the liability
B)when the principle payment is due
C)when the principle and interest payment are made
D)when the principle and interest are recorded

Question 29

According to FASB Concept Statement No.6,Elements of Financial Statements,companies routinely incur liabilities to acquire funds,goods,and services they need to operate or expand their business.Which of the following is an example of this?

A)borrowing money obligates the company to repay the loan
B)buying assets on credit obligates the company to pay for them
C)planning the knowledge,time,and skill of employees obligates the company to pay for their use
D)using company owned assets obligates the company to pay for their use
E)acquiring assets with a trade-in with cash obligates the company to pay for them
F)both A and B
G)both C and E
H)both D and E

Question 30

Clients would overstate

A)interest expense when the client fails to recognize the expense at the end of the year
B)interest expense when the client recognizes the expense at the end of the year
C)interest payable when the client recognizes the expense at the end of the year
D)a liability at the end of the year by failing to record the cash payment to reduce the liability

Question 31

The documents in the long-term debt and owner's equity business process include

A)bond agreement
B)note payable agreement
C)amortization table for long-term debt agreements
D)stock register or stock certificate book
E)adjusting journal entry report
F)All of the above

Question 32

Clients would understate

A)interest expense when the client fails to recognize the expense at the end of the year
B)interest expense when the client recognizes the expense at the end of the year
C)interest payable when the client recognizes the expense at the end of the year
D)a liability at the end of the year by failing to record the cash payment to reduce the liability

Question 33

The "note payable agreement" contains the following information

A)interest due dates and payment rates
B)interest rate and payment dates
C)maturity date and present value amount of the loan
D)present value and principle amount of the loan
E)maturity date and principle amount of the loan
F)both A and C
G)both B and E
H)both C and D

Question 34

The documents in the long-term debt and owner's equity business process include

A)bond agreement
B)note payable agreement
C)depreciation table for long-term debt agreements
D)cash register or cash certificate book
E)adjusting journal entry evaluation
F)both A and B
G)both C and E
H)both D and E

Question 35

Once a liability is recognized,it continues to be measured at

A)the amount initially measured,unless the liability is increased by payments on the principle balance of the liability
B)the amount initially recorded,unless the liability is increased by payments on the principle balance of the liability
C)the amount initially measured,unless the liability is reduced by payments on the principle balance of the liability
D)the amount initially recorded,unless the liability is reduced by payments on the principle balance of the liability

Question 36

According to FASB Concept Statement No.6,Elements of Financial Statements,companies routinely incur liabilities to acquire funds,goods,and services they need to operate or expand their business.Which of the following is an example of this?

A)investing money obligates the company to repay the loan
B)buying assets on credit obligates the company to pay for them
C)using the knowledge,time,and skill of employees obligates the company to pay for their use
D)using company owned assets obligates the company to pay for their use
E)acquiring assets with a trade-in with cash obligates the company to pay for them
F)both A and B
G)both B and C
H)both D and E

Question 37

In the process of recording interest expense,a company should recognize an expense when

A)they have incurred an economic obligation in the process of acquiring funds to operate a business
B)they have consumed an economic resource in the process of acquiring resources to operate a business
C)they have consumed an economic resource in the process of acquiring funds to operate a business
D)they have incurred expenses in the process of acquiring resources to operate a business

Question 38

According to FASB Concept Statement No.6,Elements of Financial Statements,companies routinely incur liabilities to acquire funds,goods,and services they need to operate or expand their business.Which of the following is an example of this?

A)borrowing money obligates the company to repay the loan
B)buying assets on credit obligates the company to obtain a loan
C)using the knowledge,time,and skill of employees obligates the company to pay for their use
D)using company owned assets obligates the company to pay for their use
E)acquiring assets with a trade-in with cash obligates the company to pay for them
F)both A and B
G)both A and C
H)both D and E

Question 39

According to FASB Statement of Financial Accounting Standards No 130,Reporting Comprehensive Income,companies are required to include

A)a long-term debt account titled "Accumulated Other Comprehensive Income" on the balance sheet
B)an owner's equity account titled "Accumulated Other Comprehensive Income" on the income statement
C)an owner's equity account titled "Accumulated Other Comprehensive Income" on the balance sheet
D)a long-term debt account titled "Accumulated Other Comprehensive Income" on the income statement

Question 40

The "amortization table for long-term debt agreements" contains the following information

A)a schedule of interest expense and principle portion of each payment
B)a schedule of interest expense and principle paid to date
C)a schedule of principle expense and interest portion of each payment
D)a schedule of principle expense and interest paid to date

Question 41

Which of the following are management assertions about the accounts in long-term debt and owner's equity process?

A)existence or occurrence - for classes of transactions
B)completeness - for both classes of transactions and account balances
C)valuation and allocation - for both classes of transactions and account balances
D)rights and obligations - for classes of transactions
E)accuracy - for classes of transactions
F)both A and c
G)both B and E
H)both D and E

Question 42

The client may use a variety of methods to understate liabilities,interest expense and long-term debt.These include

A)Recording operating leases as capital leases to avoid putting the liability on the balance sheet.
B)Designing off-balance sheet debt agreements with the sole purpose of keeping the debt off the books of the company.
C)Failing to disclose loan covenants on long-term agreements.These loan covenants may restrict dividend payments or limit the amount of additional debt taken on by the company.
D)Failing to disclose special arrangements,such as transactions with special purpose entities.
E)Failing to disclose nonrelated-party transactions.F.both A and B
G)both B and C
H)both D and E

Question 43

Which of the following are management assertions about the accounts in long-term debt and owner's equity process?

A)existence or occurrence - for account balances
B)completeness - for both classes of transactions and account balances
C)valuation and allocation - for both classes of transactions and account balances
D)rights and obligations - for account balances
E)accuracy - for account balances
F)both A and C
G)both B and D
H)both D and E

Question 44

The client may use a variety of methods to understate liabilities and expenses associated with stock options.These include

A)Recording operating leases as capital leases to avoid putting the liability on the balance sheet.
B)Failing to record interest expense.
C)Changing the interest rate used to expense long-term liabilities to vary the amount of interest expense
D)Failing to disclose special arrangements,such as transactions with special purpose entities.
E)Backdating stock options and failing to record compensation expense for the difference between the market price of the stock at the date of the grant and the price of the stock on the date of the backdating.

Question 45

Although management may have designed internal controls,the auditor may choose not to test them because

A)the auditor believes it is more efficient to use analytical procedures to gather evidence
B)the auditor believes it is more effective to use substantive testing to gather evidence
C)the auditor believes it is more efficient to use substantive testing to gather evidence
D)the auditor believes it is more effective to use analytical procedures to gather evidence

Question 46

The client may use a variety of methods to understate liabilities,interest expense and long-term compensation expense associated with stock options.These include

A)Recording operating leases as capital leases to avoid putting the liability on the balance sheet.
B)Failing to record compensation expense.
C)Changing the interest rate used to capitalize long-term liabilities to vary the amount of interest expense
D)Failing to disclose special arrangements,such as transactions with special purpose entities.
E)Backdating stock options and failing to record compensation expense for the difference between the market price of the stock at the date of the grant and the price of the stock on the date of the backdating.F.both A and B
G)both C and E
H)both D and E

Question 47

The client may use a variety of methods to understate liabilities,interest expense and long-term debt.These include

A)Recording operating leases as capital leases to avoid putting the liability on the balance sheet.
B)Failing to record interest expense.
C)Changing the interest rate used to capitalize long-term liabilities to vary the amount of interest expense
D)Failing to disclose special arrangements,such as transactions with special purpose entities.
E)Forward dating stock options and failing to record compensation expense for the difference between the market price of the stock at the date of the grant and the price of the stock on the date of the backdating.F.both A and B
G)both B and C
H)both D and E

Question 48

The client may use a variety of methods to understate liabilities,interest expense and long-term debt.These include

A)Recording operating leases as capital leases to avoid putting the liability on the balance sheet.
B)Designing off-balance sheet debt agreements with the sole purpose of keeping the debt off the books of the company.
C)Failing to disclose loan covenants on long-term agreements.These loan covenants may restrict dividend payments or limit the amount of additional debt taken on by the company.
D)Failing to disclose special arrangements,such as transactions with special purpose entities.
E)Failing to disclose non related-party transactions.

Question 49

Which of the following are management assertions about the accounts in long-term debt and owner's equity process?

A)existence or occurrence - for both classes of transactions and account balances
B)completeness - for classes of transactions
C)valuation and allocation - for account balances
D)rights and obligations - for both classes of transactions and account balances
E)accuracy - for account balances
F)both A and C
G)both C and E
H)both D and E

Question 50

When long-term debt is understated (intentional or unintentional)

A)management has a better chance to earn their end of year bonuses
B)outsiders are mislead about the future cash flows to pay the liabilities
C)outsiders are mislead about the current cash flows
D)management is misleading outsiders about the future cash flows the liabilities can earn

Question 51

Management makes the decision to design internal controls in the long-term debt and owner's equity process to prevent or detect misstatements in the financial statements based on

A)whether the risks in this process justifies the use of internal controls
B)whether the balances in this process justifies the use of internal controls
C)whether the volume of transactions in this process justifies the use of internal controls
D)whether the relevancy of transactions in this process justifies the use of internal controls

Question 52

Under GAAP,when companies make sales using a sales type lease,they should

A)recognize the revenue related to financing the lease,servicing the leased product,and providing supplies for the leased product immediately
B)recognize revenue related to the value of the product over the life of the lease
C)recognize revenue related to the value of the product immediately
D)delay the recognition of revenue related to financing the lease,servicing the leased product,and providing supplies for the leased product over the life of the lease
E)recognize the revenue related to financing the lease,servicing the leased product,and providing supplies for the leased product over the life of the lease
F)both A and B
G)both C and D
H)both D and E

Question 53

IT controls that the auditor might expect to find in the long-term and owner's equity process are

A)Long-term debt is recorded when cash related to debt issues is entered
B)increases in the common stock account and the additional paid in capital account are supported by decreases in either cash or assets
C)deferred interest entries must be supported by information about the principle,interest rate,and origination date of the debt
D)IT system restricts access to individuals authorized to input debt transactions and stock transactions
E)Treasury stock transactions are reported to the board of directors
F)both A and B
G)both A and D
H)both C and E

Question 54

The client may use a variety of methods to understate liabilities,interest expense and long-term debt.These include

A)Recording capital leases as operating leases to avoid putting the liability on the balance sheet.
B)Failing to disclose loan long-term agreements.
C)Failing to disclose special arrangements,such as transactions with special purpose entities in an attempt to keep debt arrangements off the books.
D)Failing to disclose non related-party transactions.
E)both A and B
F)both A and C
G)both D and E

Question 55

Which of the following are management assertions about the accounts in long-term debt and owner's equity process?

A)existence or occurrence - for classes of transactions
B)completeness - for classes of transactions
C)valuation and allocation - for account balances
D)rights and obligations - for account balances
E)accuracy - for account balances
F)both A and B
G)both B and E
Both C and D

Question 56

The decision to test internal controls in the long-term debt and owner's equity process is based on

A)whether it is an effective way to gather evidence
B)whether it is an efficient way to gather evidence
C)whether it is a relevant way to gather evidence
D)whether it is a reliable way to gather evidence

Question 57

Which of the following are management assertions about the accounts in long-term debt and owner's equity process?

A)existence or occurrence - for both classes of transactions and account balances
B)completeness - for account balances
C)valuation and allocation - for both classes of transactions and account balances
D)rights and obligations - for classes of transactions
E)accuracy - for classes of transactions
F)both A and E
G)both B and C
H)both D and E

Question 58

The most likely misstatement in the long-term debt and owner's equity business process is

A)an understatement misstatement
B)an overstatement misstatement
C)an account balance misstatement
D)a misclassification misstatement

Question 59

The client may use a variety of methods to understate liabilities,interest expense and long-term debt.These include

A)Recording capital leases as operating leases to avoid putting the liability on the balance sheet.
B)Failing to disclose dates on long-term agreements.
C)Failing to disclose special arrangements,such as transactions with special purpose entities.
D)Failing to disclose related-party transactions.Debt associated with related-parties may carry a higher risk than debt associated with non-related parties.
E)both A and B
F)both A and D
G)both D and E

Question 60

The client may use a variety of methods to understate liabilities,interest expense and long-term debt.These include

A)Recording operating leases as capital leases to avoid putting the liability on the balance sheet.
B)Failing to disclose long-term agreements.
C)Failing to disclose special debt arrangements,such as transactions with special purpose entities in an attempt to keep debt arrangements off the books.
D)Failing to disclose related-party transactions.Debt associated with related-parties may carry a higher risk than debt associated with non-related parties.
E)both A and B
F)both B and E
G)both C and D

Question 61

Which of the following is a key substantive test of transactions for the long-term debt and owner's equity process?

A)obtain an analysis of notes payable,long-term debt,and lines of credit that are included in the financial statements
B)obtain an analysis of notes payable,long-term debt,and lines of credit that originated during the year under audit
C)obtain an analysis of the activity in the capital stock accounts,including opening balances,closing balances,and all transactions recorded in the capital stock accounts during the year
D)obtain an analysis of accounts payable,notes payable,long-term debt,and lines of credit that originated during the year under audit
E)both A and B
F)both B and C
G)both D and E

Question 62

When using analytical procedures in the long-term debt and owner's equity process,the auditor might consider

A)the type of long-term debt purchased and sold in the current year and the prior year
B)the average interest rate on long-term debt in the current year and the prior year
C)the average interest rate earned on the owner's equity
D)the current interest rate on long-term debt

Question 63

Key control procedures for the long-term debt and owner's equity process are

A)documentation of duties
B)recalculation procedures
C)authorization of transaction trails
D)independent reconciliations
E)physical controls that limit access to assets
F)both A and B
G)both C and E
Both D and E

Question 64

Retained earnings are

A)an owner's equity account that reflects all the net income (or net loss)earned by the company in the past that the company has kept
B)a long-term debt account that reflects all the net income (or net loss)earned by the company in the past that the company has kept
C)an owner's equity account that reflects all the net revenue earned by the company in the past that the company has kept
D)an owner's equity account that reflects all the net income (or net loss)earned by the company in the past that the company has reinvested

Question 65

Key control procedures for the long-term debt and owner's equity process are

A)independence of duties
B)authorization procedures
C)documented transaction trails
D)segregated reconciliations
E)physical controls that allow access to assets
F)both A and B
G)both B and C
H)both D and E

Question 66

The only controls that an auditor can test are

A)undocumented controls
B)authorization procedures
C)documented controls
D)independent reconciliations
E)relevant and significant controls

Question 67

Key control procedures for the long-term debt and owner's equity process are

A)segregation of duties
B)reconciliation procedures
C)documented transaction trails
D)independent recalculations
E)physical controls that allow access to assets
F)both A and C
G)both B and E
H)both D and E

Question 68

Because long-term debt is listed as a long-term liability on the balance sheet,it should

A)represent the future value of the present cash flows needed to reduce the debt to zero
B)represent the present value of the future cash flows needed to reduce the debt to zero
C)represent the present value of the future cash flows needed to pay the current portion of the debt
D)represent the future value of the present flows needed to pay the current portion of the debt

Question 69

If the controls in the long-term debt and owner's equity process are not designed appropriately or are not operating properly,the auditor will

A)design substantive tests to determine whether the internal control failures have led to misstatements in the financial statement accounts
B)design control tests to determine whether the internal control failures have led to misstatements in the financial statement accounts
C)design substantive tests to determine whether the long-term debt failures have led to misstatements in the financial statement accounts
D)design substantive tests to determine whether the owner's equity failures have led to misstatements in the financial statement accounts

Question 70

In the long-term debt and owner's equity process,the auditor might perform which of the following analytical procedures

A)Compare the balances in the following accounts for the current year to the prior year: long-term debt,interest expense,capital stock,additional paid in capital,and retained earnings
B)Calculate the debt to equity ratio for the current year and prior years
C)Calculate the current ratio for the current year and prior years
D)Compare the transactions in the following accounts for the current year to the prior year: long-term debt,interest expense,capital stock,additional paid in capital,and retained earnings
E)Compare the balances in the following accounts for the current year to the prior year: long-term debt,accrued interest expense,accounts payable,capital stock,paid in capital,and retained earnings
F)both A and B
G)both C and E
H)both D and E

Question 71

The balance in the retained earnings account is reduced by

A)dividends declared
B)dividends paid
C)net income for the year
D)sale of treasury stock

Question 72

Shares of treasury stock

A)reduce the capital stock accounts and remain in a treasury stock account unless the treasury stock is retired by the company
B)do not reduce the capital stock accounts directly,but remain in a treasury stock account unless the treasury stock is retired by the company or reissued
C)do not reduce the capital stock accounts directly,but remain in the capital stock account unless the treasury stock is retired by the company or reissued
D)reduce the capital stock accounts and remain in a capital stock account unless the treasury stock is retired by the company or reissued

Question 73

Long-term debt accounts reflect

A)obligations to repay money borrowed over a period of time less than one year
B)intentions to borrow money over a longer period of time than one year
C)intentions to repay money borrowed over a longer period of time than one year
D)obligations to repay money borrowed over a longer period of time than one year

Question 74

The auditor uses substantive tests of transactions in the long-term debt and owner's equity business process to

A)test the reliability of transactions during the year
B)test the reliability of balances at the end of the year
C)test the recording of balances at the end of the year
D)test the recording of transactions during the year

Question 75

If the auditor decides to rely on internal control evidence in the long-term debt and owner's equity process,he will first

A)review computer access controls
B)document the internal control system
C)determine the amount of long-term debt
D)determine the amount of owner's equity

Question 76

IT controls that the auditor might expect to find in the long-term and owner's equity process are

A)Long-term debt is recorded when cash related to owner's equity issues is entered
B)increases in the common stock account and the additional paid in capital account are supported by increases in either cash or assets
C)accrued interest entries must be supported by information about the principal,interest rate,and origination date of the debt
D)IT system provides access to individuals to input debt transactions and stock transactions
E)Treasury stock transactions are reported to the board of directors
F)both A and D
G)both A and E
Both B and C

Question 77

Key control procedures for the long-term debt and owner's equity process are

A)documentation of duties
B)authorization procedures
C)segregated transaction trails
D)independent reconciliations
E)physical controls that allow access to assets
F)both A and C
G)both B and D
H)both D and E

Question 78

The balance in the capital stock accounts at year-end should include

A)beginning balance in the account from last year's audited number,increased by new shares of stock authorized during the year,and decreased by shares of stock retired during the year
B)beginning balance in the account from last year's audited number,increased by new shares of stock sold during the year,and decreased by shares of treasury stock acquired during the year
C)beginning balance in the account from last year's audited number,increased by new shares of stock sold during the year,and decreased by shares of stock retired during the year
D)beginning balance in the account from last year's audited number,increased by issued and outstanding shares of stock sold during the year,and decreased by shares of stock retired during the year

Question 79

Key control procedures for the long-term debt and owner's equity process are

A)segregation of duties
B)recalculation procedures
C)logical transaction trails
D)independent reconciliations
E)physical controls that allow access to assets
F)both A and B
G)both A and D
H)both C and E

Question 80

The capital stock accounts (capital stock par,stated value or paid in capital)reflect

A)the investment interest of individuals who loaned money to the company
B)the ownership interest of individuals who own stock in the company
C)the ownership interest of individuals who loaned money to the company
D)the ownership obligation of individuals who own stock in the company