The Auditors Are least Likely to Learn of Retirements of Equipment

question 26

Multiple Choice

The auditors are least likely to learn of retirements of equipment through which of the following?

• A)Review of the purchase returns and allowances account.
• B)Review of depreciation.
• C)Analysis of the debits to the accumulated depreciation account.
• D)Review of insurance policy riders.

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Definitions:

GAAP

Generally Accepted Accounting Principles, a collection of commonly-followed accounting rules and standards for financial reporting.

Sarbanes-Oxley

A U.S. law enacted in 2002 to protect investors from the possibility of fraudulent accounting activities by corporations, also known as the Sarbanes-Oxley Act.

Publicly Held Companies

Companies whose ownership is distributed among the general public through publicly traded shares or stocks.

Internal Control Environment

The overall attitude, awareness, and actions of directors, management, and personnel regarding internal controls and their importance in the organization.