Chapter 13 Practice

A property acquisition was capitalized for an improper amount due and the wrong amount was paid due to a transposition input error.

Vouch recorded additions to equipment accounts for the year just completed.

The cost of repairing a machine was improperly capitalized.

Vouch recorded additions to equipment accounts for the year just completed.

A machine was sold for cash which was recorded, but the retirement was not recorded.

Analyze the Miscellaneous Revenue account for the year just completed.

Treetop Corporation acquired a building and arranged mortgage financing during the year. Verification of the related mortgage acquisition costs would be least likely to include an examination of the related

Deed

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?

Existence

Depreciation was not taken on a very major piece of equipment.

Perform analytical procedures on income statement accounts.

A piece of equipment was stolen from the warehouse.

Physically examine recorded assets as of year-end.

A recorded purchase of equipment was part of a fraud scheme (including false documentation from purchase order through a fraudulent equipment receiving report). No equipment was received and the cash payment was misappropriated.

Physically examine recorded assets as of year-end.

Which of the following explanations most likely would satisfy an auditor who questions management about significant debits to the accumulated depreciation accounts?

Plant assets were retired during the year

A search for overstated property, plant, and equipment purchases would most likely include:

Property, Plant, and Equipment

Analysis of which account is least likely to reveal evidence relating to recorded retirement of equipment?

Purchase Returns and Allowances

Land was exchanged for a long-term note receivable, but the exchange was not recorded.

Review current property tax bills.

An expenditure for equipment was improperly expensed.

Review expenditures charged to a repairs and maintenance account for the year just completed.

A lien exists on certain equipment.

Review fire insurance policies.

A purchase prior to year-end was improperly recorded in the following year.

Review transactions recorded shortly after year-end.