In the audit of notes payable, an auditor testing the ASB balance assertion of accuracy and valuation most likely would:
A)read directors' and finance committee's minutes for authorization of financing transactions.
B)select a sample of paid notes and trace interest expense to the general ledger account.
C)select a sample of paid notes and recalculate interest expense for the period under audit.
D)select a sample of notes payable and vouch cash receipt to the bank statement.

Question

Quizplus · Accepted Answer

To test the accuracy and valuation assertion of notes payable, the best choice is to select a sample of paid notes and recalculate interest expense for the period under audit. This will help the auditor ensure that the interestexpense has been accurately recorded in the financial statements. Option A is relevant to the occurrence assertion, B is relevant to the completeness assertion, and D is relevant to the existence and occurrence assertion but not accuracy and valuation.

In the Audit of Notes Payable, an Auditor Testing the ASB