A Weakness in Internal Control Over Recording Retirements of Equipment

question 66

Multiple Choice

A weakness in internal control over recording retirements of equipment may cause an auditor to

• A)inspect certain items of equipment in the plant and trace those items to the accounting records.
• B)review the subsidiary ledger to ascertain whether depreciation was taken on each item of equipment during the year.
• C)trace additions to the "other assets" account to search for equipment that is still on hand but no longer being used.
• D)select certain items of equipment from the accounting records and locate them in the plant.

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Definitions:

Upsloping Line

A graphical representation indicating positive correlation between two variables; as one variable increases, so does the other.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers, usually downward sloping.

Pure Competition

A market structure characterized by a large number of small firms, a homogeneous product, and easy entry and exit from the market.

Nonprice Competition

A marketing strategy where companies attract customers through methods other than price, such as quality of product, service, or brand image.