Principles Of Auditing & Other Assurance Services
21st Edition
ISBN: 9781259916984
Author: WHITTINGTON, Ray, Pany, Kurt
Publisher: Mcgraw-hill Education,
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Chapter 13, Problem 32GOQ
Which of the following statements is not typical of property, plant, and equipment as compared to most current asset accounts?
- (1) A property, plant, and equipment cutoff error near year-end has a more significant effect on net income.
- (2) Relatively few transactions occur in property, plant, and equipment during the year.
- (3) The assets involved with property, plant, and equipment ordinarily have relatively longer lives.
- (4) Property, plant, and equipment accounts typically have a higher dollar value.
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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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- The auditor may note that annual depreciation expense is too low for a class of assetsby noting(1) insured values greatly in excess of carrying amounts.(2) large numbers of fully depreciated assets are still in use.(3) continuous trade-ins of relatively new assets.(4) excessive recurring losses on assets retired.arrow_forwardThere are various types of accounting changes, each of which is required to be reported differently.Required:1. What type of accounting change is a change from the sum-of-the-years’-digits method of depreciation to thestraight-line method for previously recorded assets as a result of new information related to production patterns? Under what circumstances does this type of accounting change occur?2. What type of accounting change is a change in the expected service life of an asset arising because of moreexperience with the asset? Under what circumstances does this type of accounting change occur?arrow_forwardWhich statement about depreciation is false?a. A major objective of depreciation accounting is to allocate the cost of using an assetagainst the revenues it helps to generate.b. Depreciation should not be recorded in years in which the market value of the asset hasincreased.c. Obsolescence as well as physical wear and tear should be considered when determiningthe period over which an asset should be depreciated.d. Depreciation is a process of allocating the cost of an asset to expense over its usefullife.arrow_forward
- Which of the following statements is (are) correct?a. Accumulated depreciation represents a cash fund beingaccumulated for the replacement of plant assets.b. The cost of a machine includes the cost of repairingdamage to the machine during the installation process.c. A company may use different depreciation methods inits financial statements and its income tax return.d. The use of an accelerated depreciation method causesan asset to wear out more quickly than does use of thestraight-line method.arrow_forwardWhich of the following statements is false? [A] cash and cash equivalents is always presented under current assets [B] all economic resources that are sold, realized, or consumed more than 12 months after reporting date are always considered noncurrent assets [C] those assets held for trading are presented under current assets [D] assets are economic resources that are expected to provide probable future economic benefit and have a value or a cost that can be measured reliablyarrow_forwardListed below are various types of accounting changes and errors. ________ 1. Change in a plant asset's salvage value. ________ 2. Change due to overstatement of inventory. ________ 3. Change from sum-of-the-years'-digits to straight-line method of depreciation. ________ 4. Change from presenting unconsolidated to consolidated financial statements. ________ 5. Change from LIFO to FIFO inventory method. ________ 6. Change in the rate used to compute warranty costs. ________ 7. Change from an unacceptable accounting principle to an acceptable accounting principle. ________ 8. Change in a patent's amortization period. ________ 9. Change from completed-contract to percentage-of-completion method on construction contracts. ________ 10. Change from FIFO to average-cost inventory method. Instructions For each change or error, indicate how it would be accounted for using the following code letters: a. Accounted for prospectively. b. Accounted for retrospectively. c. Neither…arrow_forward
- Place T or F in front of each of the following statements. 1. The straight-line method of depreciation is based on the assumption that depreciation expense can be regarded as a constant function of time. 2. Plant assets should be written down (below cost) when their market value has declined temporarily. 3. The accounting profession has developed specifically recommended procedures for recording appraisal increases with respect to plant assets. 4. An asset's cost minus its accumulated depreciation equals its book value. 5. The sum-of-the-years'-digits method of depreciation ignores salvage value in the computation of an asset's depreciable base. 6. When using the double-declining balance method of determining depreciation, a declining percentage is applied to a constant book value. 7. The book value of plant assets initially declines more rapidly under decreasing-charge methods than under the straight-line method. 8. Accounting depreciation is computed by…arrow_forwardWhich of the following statement best describes depreciation? a. It is a means of spreading the payment for non-current assets over a period of years b. It is a decline in the market value of assets c. It is a means of spreading the cost of non-current assets over the estimated useful life d. It is a means of estimating the amount of money needed to replace the assetsarrow_forwardWhich of the following would have an effect on the presentation of past years' comparable financial statements? Select one: O a. A component operation of the company is discontinued O b. Revising the estimated life of equipment Oc Correcting an error due to improper revenue recognition O d. Impairment of Goodwill Oe. Using MACRS to compute the depreciation of an asset for tax purposesarrow_forward
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