- Companies, like individuals, have long-term loans. To perform an audit, you need to understand the forms a company’s long-term loans can take and the debt-related issues you need to consider when conducting your audit. Your audit clients use three debt vehicles: mortgages, notes, and bonds, to finance the acquisition of their assets. Depending on the client, bonds may not be as common as mortgages and notes.
- Mortgages are used to finance the purchase of real property tangible assets. The property collateralizes the mortgage, which means the property is held as security on the mortgage.
- Notes are formal written documents that spell out how money is being borrowed. This type of agreement between a lender and a borrower specifies principal, rate, and time.
- Bonds are long-term lending agreements between a borrower and lender.
Long Term Loans
1566EGP
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