An auditor is determining whether an issuance of notes payable for cash was correctly recorded. Her or his 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 issuance of notes payable to the accounting records would confirm that the transaction was recorded accurately. Confirming with the bond trustee or underwriter would not necessarily provide evidence that the issuance was recorded correctly, and including a footnote disclosure does not confirm the accuracy of the initial recording.

An Auditor Is Determining Whether an Issuance of Notes Payable