An auditor's program to examine long-term debt should include steps that require:

Question

Quizplus · Accepted Answer

Choice "A" is correct. Examination of bond trust indentures should be included in audit program of long-term debt to assure that the client was not in violation of any covenants in the indentures. Choice "B" is incorrect. Inspecting the accounts payable subsidiary ledger relates to accounts payable, a current liability. Choice "C" is incorrect. Long-term debt generates interest expense, not interest income. Choice "D" is incorrect. Generally, the existence of the bondholders of debt is not verified.

An Auditor's Program to Examine Long-Term Debt Should Include Steps