1 What Procedures Might Be Useful to the Auditor in Determining

question 28

Essay

1. What procedures might be useful to the auditor in determining if all disposals of property, plant and equipment have been recorded?
2.What procedures would be adopted by the auditor to gather evidence on the reasonableness, consistency and accuracy of depreciation charges (expense)?

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Definitions:

Future Cash Flows

Estimates of the amounts of cash that a company expects to receive or pay out in the future, important for budgeting, forecasting, and valuation.

Interest-Bearing Note

A debt instrument that pays interest to the holder at a fixed or variable interest rate until the principal amount is repaid.

Adjusting Entry

A journal entry made at the end of an accounting period to allocate income and expenditures to the correct period.

Interest Expense

The expense recorded by a business for the funds it has borrowed, categorized as a non-operating expense in the income statement.