Which of the Following Audit Steps Would Be Most Effective

question 460

Multiple Choice

Which of the following audit steps would be most effective to review proper recording of and accountability over physical assets?

• A) Physically inspect all assets on the organization's property. II. Select a sample department and physically inspect assets in the department. III. Select a sample from the organization's records of physical assets and physically locate each asset. IV. Identify assets at a sample of locations and trace to the organization's records.
• B) I only
• C) I and IV only
• D) II and III only
• E) III and IV only

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Definitions:

Bargain Purchase Option

A lease agreement provision allowing the lessee to purchase the leased asset at the end of the lease term at a price significantly lower than the expected fair market value.

Fair Value

An estimate of the market value of an asset or liability based on current prices in active markets for similar assets or liabilities.

Lessee

A Lessee is a person or entity who leases an asset from another, the lessor, under a lease agreement.

Lessor

A lessor is the party that leases or rents a property or asset to another party, known as the lessee.