An auditor is determining whether an issuance of notes payable for cash was correctly recorded.Her best course of action would be to
A)confirm with the bond trustee as to the amount of bonds issued.
B)confirm with the underwriter as to the appropriate market yield on the bonds.
C)trace the cash received from the proceeds to the accounting records.
D)verify that the amount was included in a footnote disclosure.

Question

Quizplus · Accepted Answer

Tracing the cash received from the proceeds to the accounting records would provide the most direct evidence that the notes payable were correctly recorded. Confirming with the bond trustee or underwriter would not necessarily indicate whether the issuance was correctly recorded, and checking a footnote disclosure is not sufficient evidence on its own.

An Auditor Is Determining Whether an Issuance of Notes Payable