When Using the Cycle Approach to Segmenting an Audit, the Reason

question 78

Multiple Choice

When using the cycle approach to segmenting an audit, the reason for treating capital acquisition and repayment separately from the acquisition of goods and services is that:

• A) the transactions are related to financing a company rather than to its operations.
• B) most capital acquisition and repayment cycle accounts involve few transactions, but each is often highly material, and therefore should be audited extensively.
• C) both A and B
• D) neither A nor B