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

Testing the ASB balance assertion of accuracy and valuation for notes payable would involve verifying that the interest expense recorded in the general ledger is accurate and properly valued. To do this, the auditor would select a sample of paid notes and recalculate the interest expense for the period under audit. This will help ensure that the company has properly valued its notes payable and recorded interest expense correctly. Option A is not directly relevant to testing the accuracy and valuation of notes payable, while option B tests only a small aspect of this assertion. Option D involves testing the existence and completeness assertion, but not the accuracy and valuation assertion. Thus, option C is the best choice for testing the accuracy and valuation assertion of notes payable.

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