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 describes the auditors’ approach to auditing property, plant and equipment on continuing audit? a)Perform analytical procedures. b)Substantiating all property, plant & equipment at year end. c)Take a complete inventory of property, plant & equipment. d)Audit the additions and reductions in property, plant & equipment during the period. 5)Which of the following is not a control that should be established over plant assets? a)Establish a policy regarding the minimum dollar amount of expenditures to be considered for capitalization. b)A system of retirement work orders. c)Maintain a subsidiary ledger of the assets. d)Require the department in need of equipment to order the equipment. 6)Which of the following is true about the audit of property, plant & equipment? a)One of the most difficult assertions to audit for these accounts is existence. b)For the first audit of company, the audit of these accounts may require substantial additional time. c)Confirmation is an important audit procedure for these accounts. d)Because of the materiality of these accounts, they generally require a substantial amount of audit time.

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 describes the auditors’ approach to auditing property, plant and equipment on continuing audit? a)Perform analytical procedures. b)Substantiating all property, plant & equipment at year end. c)Take a complete inventory of property, plant & equipment. d)Audit the additions and reductions in property, plant & equipment during the period. 5)Which of the following is not a control that should be established over plant assets? a)Establish a policy regarding the minimum dollar amount of expenditures to be considered for capitalization. b)A system of retirement work orders. c)Maintain a subsidiary ledger of the assets. d)Require the department in need of equipment to order the equipment. 6)Which of the following is true about the audit of property, plant & equipment? a)One of the most difficult assertions to audit for these accounts is existence. b)For the first audit of company, the audit of these accounts may require substantial additional time. c)Confirmation is an important audit procedure for these accounts. d)Because of the materiality of these accounts, they generally require a substantial amount of audit time.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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 describes the auditors’ approach to auditing property, plant and equipment on continuing audit?

a)Perform analytical procedures.

b)Substantiating all property, plant & equipment at year end.

c)Take a complete inventory of property, plant & equipment.

d)Audit the additions and reductions in property, plant & equipment during the period.

5)Which of the following is not a control that should be established over plant assets?

a)Establish a policy regarding the minimum dollar amount of expenditures to be considered for capitalization.

b)A system of retirement work orders.

c)Maintain a subsidiary ledger of the assets.

d)Require the department in need of equipment to order the equipment.

6)Which of the following is true about the audit of property, plant & equipment?

a)One of the most difficult assertions to audit for these accounts is existence.

b)For the first audit of company, the audit of these accounts may require substantial additional time.

c)Confirmation is an important audit procedure for these accounts.

d)Because of the materiality of these accounts, they generally require a substantial amount of audit time.

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