Which of the following statements is true regarding the appropriate audit procedures to perform for debt and stockholder's equity accounts?
A)The auditor will usually decide to test debt,including interest,using only substantive procedures.
B)Testing debt,including interest,is typically accomplished using only control procedures.
C)When auditing stockholders' equity transactions,the auditor commonly uses a control procedure approach,but uses only substantive procedures to test debt obligation transactions.
D)None of these statements is true.

Question

Quizplus · Accepted Answer

Debt, including interest, is usually tested using only substantive procedures as control procedures may not be effective in detecting misstatements related to debt obligations. On the other hand, testing stockholders' equity transactions may involve a combination of control procedures and substantive procedures depending on the nature of the transactions. Option B and C are incorrect as they suggest using either only control procedures or only substantive procedures for testing debt and stockholders' equity accounts, which is not recommended by auditing standards. Option D is incorrect as there is at least one statement that is true, which is statement A.

Which of the Following Statements Is True Regarding the Appropriate