Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 13, Problem 32DOQ
Which of the following accounts should be reviewed by the auditors to gain reasonable assurance that additions to property, plant, and equipment are not understated?
- (1)
Depreciation. - (2) Accounts Payable.
- (3) Cash.
- (4) Repairs.
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Students have asked these similar questions
In the audit of the financial statements, to determine the risks of material misstatement when planning the audit of the tangible fixed assets item, what types of information must the auditor collect? List audit procedures (at least 4 procedures) to collect sufficient and appropriate evidence as a basis for confirmation of tangible fixed assets.
In performing risk assessment procedures for property, plant and equipment, an auditor may inquire of the client personnel which of the following questions?
a. Is depreciation calculation and recording automated?
b. Is there periodic physical count and tagging of property, plant and equipment? Is the result of the count reconciled to ledgers and general ledgers?
c. Both a and b.
d. Neither a nor b.
1) The auditors analyze repairs and maintenance expense to:
a)determine that plant & equipment accounts are not understated.
b)determine that all maintenance items are recorded.
c)determine that plant & equipment accounts are not overstated
d)determine that maintenance expense amounts are authorized.
2)In auditing valuation of property, plant and equipment when its value is impaired, the auditors should:
a)recalculate the depreciation expense on the item.
b)recompute the net book value of the item.
c)vouch the purchase of the item.
d)evaluate the valuation model used for the item.
3)Which of the following best describes why auditors audit leased assets in conjunction with the audit of property, plant & equipment?
a)Management may choose to lease assets rather than buy them.
b)Leased assets have a higher risk of misstatement.
c)Most leased assets should be capitalized.d)Repairs and maintenance expense is affected by leased assets.
4)Which of the following best…
Chapter 13 Solutions
Principles Of Auditing & Other Assurance Services
Ch. 13 - Prob. 1RQCh. 13 - K-J Corporation has current assets of 5 million...Ch. 13 - Prob. 3RQCh. 13 - Prob. 4RQCh. 13 - Explain the use of a system of authorizations for...Ch. 13 - Moultrie Company discovered recently that a number...Ch. 13 - Does a failure to record the retirement of...Ch. 13 - Prob. 8RQCh. 13 - Prob. 9RQCh. 13 - Prob. 10RQ
Ch. 13 - Prob. 11RQCh. 13 - Prob. 12RQCh. 13 - Prob. 13RQCh. 13 - Prob. 14RQCh. 13 - Prob. 15RQCh. 13 - Gibson Manufacturing Company acquired new factory...Ch. 13 - Prob. 17RQCh. 13 - Do the auditors question the service lives adopted...Ch. 13 - Prob. 19RQCh. 13 - Explain how the existence of lease agreements may...Ch. 13 - Prob. 21RQCh. 13 - Prob. 22QRACh. 13 - Prob. 23QRACh. 13 - Gruen Corporation is a large diversified company...Ch. 13 - Prob. 25QRACh. 13 - Prob. 26QRACh. 13 - Prob. 27QRACh. 13 - Prob. 28QRACh. 13 - Prob. 29QRACh. 13 - Prob. 30QRACh. 13 - Prob. 31QRACh. 13 - To assure accountability for fixed-asset...Ch. 13 - Prob. 32BOQCh. 13 - Which of the following is an internal control...Ch. 13 - Which of the following accounts should be reviewed...Ch. 13 - Prob. 32EOQCh. 13 - Prob. 32FOQCh. 13 - Which of the following statements is not typical...Ch. 13 - Prob. 32HOQCh. 13 - Prob. 32IOQCh. 13 - An effective procedure for identifying unrecorded...Ch. 13 - Which of the following is not an overall test of...Ch. 13 - Prob. 32LOQCh. 13 - Prob. 33OQCh. 13 - Analysis of which account is least likely to...Ch. 13 - Prob. 34BOQCh. 13 - Prob. 34COQCh. 13 - Prob. 34DOQCh. 13 - A search for overstated property, plant, and...Ch. 13 - The following are typical questions that might...Ch. 13 - Prob. 36PCh. 13 - Prob. 37PCh. 13 - Chem-Lite, Inc., maintains its accounts on the...Ch. 13 - Prob. 39PCh. 13 - You are reviewing the property, plant, and...
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Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Which of the following best describes the independent auditor's approach to obtaining satisfaction concerning depreciation expense in the income statement? a.Review the mathematical accuracy of the amounts charged to income as a result of depreciation expens b.Determine the method of computing depreciation expense and ascertain that it is in accordance with generally accepted accounting principle c.Support the basis of depreciable assets and the depreciation expens d.Reconcile the amount of depreciation expense to those amounts credited to accumulated depreciation account e.Select a sample of equipment items in the manufacturing facility and vouch back to the recorded subsidiary ledge r.s.e.s.e.ry ledger.arrow_forwardThe auditing procedure that could least likely lead the auditor to find unrecorded property, plant, and equipment disposals isA. Vouching purchase invoices for asset additions.B. Review of voucher for the payment of property taxes.C. Review of miscellaneous income accountD. Review of loan agreement for fixed assets used as collateralE. None of themarrow_forwardIn auditing depreciation expense, what major considerationsshould the auditor keep in mind? Explain how each can be verifiedarrow_forward
- The auditor should see to it that fully depreciated property, plant, and equipment still in use must be disclosed True or False?arrow_forwardWhich of the following procedures is not a procedure used by an auditor in searching for unrecorded disposals of long-lived assets? a. Examine property tax records. b. Send confirmations to insurance agents. c. Examine scrap sales accounts. d. Make client inquiries.arrow_forward29. Which of the following best describes the independent auditors' approach to obtaining satisfaction concerning depreciation expense in the income statement? Group of answer choices Establish the basis for depreciable assets and verify the depreciation expense Reconcile the amount of depreciation expense to those amounts credited to accumulated depreciation accounts Determine the method for computing depreciation expense and ascertain that is in accordance with generally accepted accounting principles Verify the mathematical accuracy of the amounts charged to income as a result of depreciation expensearrow_forward
- In the examination of property, plant, and equipment, the auditor tries to determine all of the followingexcept theA. Effectiveness of the internal control structureB. Authorization of property abandoned during the yearC. Presence of an insurance policy related to property, plant, and equipmentD. Availability of company’s depreciation policyE. None of themarrow_forwardIn performing risk assessment procedures for property, plant and equipment, an auditor may inquire of the client personnel which of the following questions? a. Is depreciation calculation and recording automated? b. Is there periodic physical count and tagging of property, plant and equipment? Is the result of the count reconciled to ledgers and general ledgers? c. Both a and b. d. Neither a nor b. Group of answer choices a c b darrow_forwardthe heightened risk of material misstatement. 6. Which of the. following techniques overstate long-lived assets? a. Overvalue existing assets. b. Include fictitious assets on the financial statements. c. Capitalize transactions that should be expensed. d. All of the above. can be used by management to 7. Which of the following analyses might an auditor perform as part of preliminary analytical procedures? a. Develop an overall estimate of depreciation expense. b. Compare capital expenditùres with the client's capital budget. c. Perform a trend analysis of the ratio of depreciation expense to total depreciable long-lived tangible assets. d. All of the above could be performed as part of preliminary analytical procedures. 8. Assume that the auditor decides to only, perform substantive tests of details when auditing the equipment account. Which of the following statements best describes the circumstancės associated with the client being audited? The client does not have effective controls…arrow_forward
- When an auditor reviews additions to the equipment (fixed asset) account to make sure that fixed assets are not overstated, she wants to obtain evidence as to management’s assertion regardinga. Completeness.b. Existence.c. Valuation and allocation.d. Rights and obligations.e. Occurrencearrow_forwardWhen auditing the existence assertion for an asset, auditors proceed from thea. Financial statement amounts back to the potentially unrecorded items.b. Potentially unrecorded items forward to the financial statement amounts.c. General ledger back to the supporting original transaction documents.d. Supporting original transaction documents to the general ledger.arrow_forwardWhich of the following audit procedures will apply to obtain the reliable audit evidence relating to the existence of tangible assets? O a. Reperformance O b. Confirmation O c. Inspection O d. Recalculationarrow_forward
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