Auditing Chapter 14 Exam Bank Solution Manual (100% Pass)
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Auditing Chapter 14
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Auditing Chapter 14
Auditing Chapter 14 Exam Bank Solution Manual (100% Pass)
In performing a search for unrecorded retirements of fixed assets, an auditor would most likely
a) inspect the property ledger and the insurance and tax records, and then tour the client's facilities
b) tour the client's facilities, and ...
Auditing Chapter 14 Exam Bank Solution Manual (100% Pass)
In performing a search for unrecorded retirements of fixed assets, an auditor would most likely
a) inspect the property ledger and the insurance and tax records, and then tour the client's facilities
b) tour the client's facilities, and then inspect the properly ledger and the insurance and tax records
c) analyze the repair and maintenance account, and then tour the client's facilities
d) tour the client's facilities, and then analyze the repair and maintenance account - Answers a) inspect
the property ledger and the insurance and tax records, and then tour the client's facilities
Which of the following explanations most likely would satisfy an auditor who questions management
about significant debits to accumulated depreciation accounts in the current year?
a) prior years' depreciation expenses were erroneously understated
b)current year's depreciation expenses was erroneously understated
c) the estimated remaining useful lives of plant assets were revised upward
d) plant assets were retired during the current year - Answers d) plant assets were retired during the
current year
When auditing prepaid insurance, an auditor discovers that the original insurance policy on plant
equipment is not available for inspection. The policy's absence most likely indicates the possibility of
a(n)
a) insurance premium due but not recorded
b) deficiency in the coinsurance provision
c) lien on the plant equipment
d) understatement of insurance expenses - Answers c) lien on the plant equipment
An auditor analyzes repairs and maintenance accounts primarily to obtain evidence in support of the
relevant assertion that all
a) noncapitalizable expenditures for repairs and maintenance have been recorded in the proper period
b) expenditures for property and equipment have been recorded in the proper period
c) noncapitalizable expenditures for repairs and maintenance have been properly charged to expense
d) expenditures for property and equipment have not been charged to expense - Answers d)
expenditures for property and equipment have not been charged to expense
, In auditing intangible assets, an auditor most likely would review or recompute amortization and
determine whether the amortization period is reasonable in support of the relevant financial statement
assertion of
a) valuation and allocation
b) existence
c) completeness
d) rights and obligations - Answers a) valuation and allocation
Which of the following internal control activities most likely justifies reducing the assessment of the risks
of material misstatement for plant and equipment acquisitions?
a) periodic physical inspection of plant and equipment by the internal audit staff
b) comparison of current-year plant and equipment account balances with prior-year actual balances
c) the review of prenumbered purchase orders to detect unrecorded trade-ins
d) approval or periodic depreciation entries by a supervisor independent of the accounting department -
Answers a) periodic physical inspection of plant and equipment by the internal audit staff
Equipment acquisitions that are misclassified as maintenance expenses most likely would be detected
by an internal control activity that provides for
a) segregation of duties for employees in accounts payable department
b) independent verification of invoices for disbursements recorded as equipment acquisitions
c)investigation of variances within a formal budgeting system
d) authorization by the board of directors of significant equipment acquisitions - Answers c)investigation
of variances within a formal budgeting system
which of the following combinations of procedures would an auditor most likely perform to obtain
evidence about fixed asset additions?
a) inspecting documents and physically examining assets
b) recomputing calculations and obtaining written management representations
c) observing operating activities and comparing balances with prior-period balances
d) confirming ownership and corroborating transactions through inquiries of client personnel - Answers
a) inspecting documents and physically examining assets
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