The Auditor Needs to Gain Reasonable Assurance That the Equipment

question 117

Multiple Choice

The auditor needs to gain reasonable assurance that the equipment accounts in the fixed asset master file are not understated. Which of the following accounts would most likely be reviewed in making that determination?

• A) depreciation expense
• B) repairs and maintenance expense
• C) gains/losses on sales and retirements
• D) cash

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Definitions:

Marginal Cost

The expense associated with manufacturing an extra unit of a product or service.

Average Fixed Cost

is calculated by dividing the total fixed costs of production by the quantity of output produced, showing the cost per unit of output.

Total Variable Cost

The sum of all variable expenses related to the production of goods or services, which vary with the level of output.

Total Cost

The sum of all costs incurred by a business in producing a certain quantity of a good or service.