An Auditor Has Been Engaged to Report on Management's Report

question 21

Multiple Choice

An auditor has been engaged to report on management's report on internal control.Management's report points to a material weakness in its system of internal controls over inventory.The auditor's report should be:

• A)An adverse opinion.
• B)A qualified opinion for a GAAP departure.
• C)A clean opinion.
• D)A clean opinion with an emphasis of matter paragraph.

Classify costs related to property, plant, and equipment into appropriate accounts.

Determine the capitalization vs. expensing of costs related to property, plant, and equipment.

Record acquisitions and improvements of property, plant, and equipment in journal entries.

Calculate and understand the concept of interest capitalization.

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Definitions:

Special Journals

Journals that record similar types of transactions, such as all credit sales.

Sales Returns

Goods returned by customers after purchase, reducing the total sales revenue.

Cash Payments Journal

An accounting ledger that tracks all cash payments made by a business, including expenses, debt payments, and purchases.

Control Account

A general ledger account that summarizes and controls the detailed data recorded in subordinate ledger accounts.