Audit Exam 3 With Complete Questions And Correct
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When auditing an entity's reported amount for property, plant, and
equipment, which assertion will be supported with evidence obtained by the
auditor during an examination of the repairs and maintenance expense
account? - (ANSWERS)Completeness
A client has disposed of several pieces of manufacturing equipment at a
significant gain. This raises questions as to which assertion in regard to
property, plant, and equipment? - (ANSWERS)Valuation and allocation
Which of the following explanations most likely would satisfy an auditor
who questions management about significant debits to the accumulated
depreciation accounts? - (ANSWERS)Plant assets were retired during the
year.
In testing plant and equipment balances, an auditor may select recorded
additions in the analysis of plant and equipment and inspect the actual
asset(s) involved. Which management assertion is this procedure most
directly related to? - (ANSWERS)Existence
True or False The auditors' approach to the audit of property, plant, and
equipment is influenced by the large number of transactions that occur. -
(ANSWERS)False
True Or False The plant and equipment budget is an important control for
plant and equipment. - (ANSWERS)True
To achieve effective internal control over fixed-asset additions, a company
,Audit Exam 3 With Complete Questions And Correct
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should establish procedures that require: - (ANSWERS)authorization and
approval of major fixed-asset additions.
A normal audit procedure is to analyze the current year repairs and
maintenance accounts to provide evidence in support of the audit
proposition that: - (ANSWERS)expenditures for fixed assets have been
capitalized.
Which of the following is the best evidence of real estate ownership at the
balance sheet date? - (ANSWERS)Paid real estate tax bills.
Audit of which of the following accounts is most likely to reveal evidence
relating to recorded retirements of equipment? - (ANSWERS)Accumulated
depreciation.
An effective procedure for identifying unrecorded retirements of equipment
is to: - (ANSWERS)Select items of equipment in the accounting records
and then locate them in the plant.
True Or False Physical inventories of plant and equipment assets frequently
reveal missing assets - (ANSWERS)True
True Or False The auditors typically vouch major additions to plant and
equipment recorded during the period under audit. - (ANSWERS)True
True Or False A major control procedure related to plant and equipment is a
budget for acquisitions and disposition. - (ANSWERS)True
,Audit Exam 3 With Complete Questions And Correct
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True or False The primary purpose of internal control over plant and
equipment is to safeguard the assets from theft. - (ANSWERS)False
True Or False Even when internal control is weak, a significant portion of
the audit work on property, plant, and equipment may be performed at an
interim date. - (ANSWERS)True
When there are numerous property and equipment transactions during the
year, an auditor who plans to assess control risk at a low level usually
performs: - (ANSWERS)Tests of controls and limited tests of current year
property and equipment transactions.
Which of the following is not a control that should be established for
purchases of equipment? - (ANSWERS)Requiring that the department that
ordered the equipment is the same that requested the equipment.
Which of the following is not one of the auditors' objectives in auditing
depreciation? - (ANSWERS)Establishing the cash outflows due to
depreciation.
Which of the following is the best evidence of continuous ownership of
property? - (ANSWERS)Examination of the client's property tax bills.
Which of the following best describes the auditors' typical observation of
plant and equipment? - (ANSWERS)The auditors observe major additions
to plant and equipment made during the year.
, Audit Exam 3 With Complete Questions And Correct
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Which of the following is used to obtain evidence that the client's
equipment accounts are not understated? - (ANSWERS)Analyzing repairs
and maintenance expense accounts.
For which of the following accounts is it most likely that much of the audit
work can be performed in advance of the balance sheet date? -
(ANSWERS)Property, plant, and equipment.
Which of the following is a customary audit procedure for the verification
of the legal ownership of real property? - (ANSWERS)Examination of
deeds and title guaranty policies on hand.
Which of the following best describes the independent auditors' approach of
depreciation expense on the income statement? - (ANSWERS)Establish the
basis for depreciable assets and verify the depreciation expense.
Which of the following is the most important control procedure over
acquisitions of property, plant, and equipment? - (ANSWERS)Using a
budget to forecast and control acquisitions and retirements.
To strengthen internal control over the custody of heavy mobile equipment,
the client would most likely institute a policy requiring a periodic: -
(ANSWERS)Inspection of equipment and reconciliation with accounting
records.
The audit procedure of analyzing the repairs and maintenance accounts is
Verified Answers
When auditing an entity's reported amount for property, plant, and
equipment, which assertion will be supported with evidence obtained by the
auditor during an examination of the repairs and maintenance expense
account? - (ANSWERS)Completeness
A client has disposed of several pieces of manufacturing equipment at a
significant gain. This raises questions as to which assertion in regard to
property, plant, and equipment? - (ANSWERS)Valuation and allocation
Which of the following explanations most likely would satisfy an auditor
who questions management about significant debits to the accumulated
depreciation accounts? - (ANSWERS)Plant assets were retired during the
year.
In testing plant and equipment balances, an auditor may select recorded
additions in the analysis of plant and equipment and inspect the actual
asset(s) involved. Which management assertion is this procedure most
directly related to? - (ANSWERS)Existence
True or False The auditors' approach to the audit of property, plant, and
equipment is influenced by the large number of transactions that occur. -
(ANSWERS)False
True Or False The plant and equipment budget is an important control for
plant and equipment. - (ANSWERS)True
To achieve effective internal control over fixed-asset additions, a company
,Audit Exam 3 With Complete Questions And Correct
Verified Answers
should establish procedures that require: - (ANSWERS)authorization and
approval of major fixed-asset additions.
A normal audit procedure is to analyze the current year repairs and
maintenance accounts to provide evidence in support of the audit
proposition that: - (ANSWERS)expenditures for fixed assets have been
capitalized.
Which of the following is the best evidence of real estate ownership at the
balance sheet date? - (ANSWERS)Paid real estate tax bills.
Audit of which of the following accounts is most likely to reveal evidence
relating to recorded retirements of equipment? - (ANSWERS)Accumulated
depreciation.
An effective procedure for identifying unrecorded retirements of equipment
is to: - (ANSWERS)Select items of equipment in the accounting records
and then locate them in the plant.
True Or False Physical inventories of plant and equipment assets frequently
reveal missing assets - (ANSWERS)True
True Or False The auditors typically vouch major additions to plant and
equipment recorded during the period under audit. - (ANSWERS)True
True Or False A major control procedure related to plant and equipment is a
budget for acquisitions and disposition. - (ANSWERS)True
,Audit Exam 3 With Complete Questions And Correct
Verified Answers
True or False The primary purpose of internal control over plant and
equipment is to safeguard the assets from theft. - (ANSWERS)False
True Or False Even when internal control is weak, a significant portion of
the audit work on property, plant, and equipment may be performed at an
interim date. - (ANSWERS)True
When there are numerous property and equipment transactions during the
year, an auditor who plans to assess control risk at a low level usually
performs: - (ANSWERS)Tests of controls and limited tests of current year
property and equipment transactions.
Which of the following is not a control that should be established for
purchases of equipment? - (ANSWERS)Requiring that the department that
ordered the equipment is the same that requested the equipment.
Which of the following is not one of the auditors' objectives in auditing
depreciation? - (ANSWERS)Establishing the cash outflows due to
depreciation.
Which of the following is the best evidence of continuous ownership of
property? - (ANSWERS)Examination of the client's property tax bills.
Which of the following best describes the auditors' typical observation of
plant and equipment? - (ANSWERS)The auditors observe major additions
to plant and equipment made during the year.
, Audit Exam 3 With Complete Questions And Correct
Verified Answers
Which of the following is used to obtain evidence that the client's
equipment accounts are not understated? - (ANSWERS)Analyzing repairs
and maintenance expense accounts.
For which of the following accounts is it most likely that much of the audit
work can be performed in advance of the balance sheet date? -
(ANSWERS)Property, plant, and equipment.
Which of the following is a customary audit procedure for the verification
of the legal ownership of real property? - (ANSWERS)Examination of
deeds and title guaranty policies on hand.
Which of the following best describes the independent auditors' approach of
depreciation expense on the income statement? - (ANSWERS)Establish the
basis for depreciable assets and verify the depreciation expense.
Which of the following is the most important control procedure over
acquisitions of property, plant, and equipment? - (ANSWERS)Using a
budget to forecast and control acquisitions and retirements.
To strengthen internal control over the custody of heavy mobile equipment,
the client would most likely institute a policy requiring a periodic: -
(ANSWERS)Inspection of equipment and reconciliation with accounting
records.
The audit procedure of analyzing the repairs and maintenance accounts is
