1. Long-lived assets include which of the following? a. Tangible assets such as equipment. b. Intangible assets such as patents. c. Natural resources. d. All of the above.
1. Long-lived assets include which of the following? a. Tangible assets such as equipment. b. Intangible assets such as patents. c. Natural resources. d. All of the above.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Multiple Choice Questions
1. Long-lived assets include which of the following?
a. Tangible assets such as equipment.
b. Intangible assets such as patents.
c. Natural resources.
d. All of the above.
2. Which of the following statement is true?
Existence and valuation assertions related to long-lived assets åre
usually the most relevant assertions.
b. A concern´regarding the existence of long-lived assets relates to
whether management has properly recorded depreciation.
c. Depletion expense is not an account that would be included when
auditing long-lived assets.
d. All of the above statements are true.
а.
3. Which of the following is not an inherent risk related to long-lived asset.
accounts?
a. Failing to record asset disposals.
b. `Capitalizing repairs and maintenance expense.
c. Changing depreciation estimates to manage earnings.
d. All of the above.
4. Which of the following risks is an inherent risk related to asset
impairment?
a. Determining asset impairment is based on management judgment.
b. It is difficult to identify the costs associated with the discovery of
natural resources.
c. Management might have incentives to not record all asset disposals.
d. All of the above are inherent risks related to asset impairment.
5. Which of the following statements is false regarding fraud risk factors
related to long-lived assets, tangible and intangible?
A potential fraud scheme involves not removing sold assets from the
books.
а.
b. Because long-lived assets are typically an audit area of low risk,
auditors do not need to perform brainstorming activities related to
long-lived assets.
Management might use unreasonably long depreciable lives in an
effort to reduce expenses,
d. None of the above statements is false.
с.
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