Chapter 13 Study Guide

the following policy is an internal control weakness related to the acquisition of factory equipment

acquisitions are to be made through and approved by the department in need of the equipment

in examination of PPE, the auditors try to determine all of the following

adequacy of internal control, extent of property abandoned during the year, and reasonableness of depreciation

a machine was sold for cash, but the retirement was not recorded

analyze the misc revenue account

to achieve effective internal control over fixed assets additions, a company should establish procedures that require

authorization and approval of major fixed asset additions

VV has new secret formula. VV capitalized research. CPA examining account would probably

confer with management regarding ownership of secret formula

auditors may conclude that depreciation charges are insufficient by noting

excessive recurring losses on assets retired

a normal audit procedure is to analyze the current year repairs and maintenance accounts to provide evidence in support of the audit proposition that

expenditures for fixed assets have been capitalized

the best evidence of real estate ownership at the balance sheet date

paid real estate tax bills

an expenditure for equipment was improperly expensed

review expenditures charged to a repairs and maintenance account

a lien exists on certain equipment

review fire insurance policy

audit procedure that least likely to lead auditors to fine unrecorded fixed asset disposals

review repairs and maintenance expense

land was exchanged for a long term note receivable, but he exchange was not recorded

review the current property tax bills

VV erroneously capitalized painting its warehouse. examining financial statements would most likely learn of this error by

reviewing the titles and descriptions for all construction of work order issued during the year

the cost of repairing a machine was improperly capitalized

vouch additions to equipment accounts

an important consideration to the auditor in the audit of equipment is to determine

whether a recorded gain on a trade of equipment is appropriate