Which One of the Following Ratio and Trend Analysis Procedures

question 110

Multiple Choice

Which one of the following ratio and trend analysis procedures might identify a possible misstatement of expensing amounts that should be capital items?

• A) Compare 'depreciation expense divided by gross property, plant, and equipment cost' with previous years.
• B) Compare 'monthly or annual repairs and maintenance, supplies expense, small tools expense, and similar accounts' with previous years.
• C) Compare 'accumulated depreciation divided by gross property, plant, and equipment cost' with previous years.
• D) Compare 'gross property, plant, and cost divided by some method of production' with previous years.

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Definitions:

Fair Values

The valuation received for disposing of an asset or the expense of moving a liability in an organized market activity on the assessment date.

Acquisition

The process of obtaining control of another corporation, purchasing its shares, or assets, to expand or diversify operations.

Voting Common Stock

Shares that give the shareholder voting rights in corporate decisions, typically one vote per share owned.

Preferred Stock

A class of ownership in a corporation with a fixed dividend that is paid out before any dividends to common stockholders.