Why is it more important to search for unrecorded notes payable than for unrecorded notes receivable? Suggest audit procedures that the auditor can use to uncover unrecorded notes payable.

List four examples of interest-bearing liability accounts commonly found in balance sheets. What characteristics do these liabilities have in common? How do they differ?
22-2 (OBJECTIVE 22-2) It is common practice to audit the balance in notes payable in conjunction with the audit of interest expense and interest payable. Explain the advantages of this approach.
22-3 (OBJECTIVE 22-2) Which analytical procedures are most important in verifying notes payable? Which types of misstatements can the auditor uncover by the use of these tests?
22-4 (OBJECTIVE 22-2) Why is it more important to search for unrecorded notes payable than for unrecorded notes receivable? Suggest audit procedures that the auditor can use to uncover unrecorded notes payable.
22-5 (OBJECTIVE 22-2) What is the primary purpose of analyzing interest expense? Given this purpose, what primary considerations should the auditor keep in mind when doing the analysis?
22-6 (OBJECTIVE 22-2) Distinguish between (a) tests of controls and substantive tests of transactions and (b) tests of details of balances for liability accounts in the capital acquisition and repayment cycle.
22-7 (OBJECTIVE 22-2) List two types of restrictions long-term creditors often put on companies when granting them a loan. How can the auditor find out about these restrictions?

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