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

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Definitions:

Rawlsian

Pertaining to the philosophical ideas of John Rawls, especially his theory of justice which emphasizes fairness and the "veil of ignorance" principle in ethical decision making.

Utilitarian

A philosophical theory that suggests an action is right if it leads to the greatest happiness for the greatest number of people.

Paternalism

The practice or policy of limiting someone's freedom or making decisions for them in their supposed best interest.