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

question 37

Multiple Choice

When using the cycle approach to segmenting the 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 are correct.
• D)neither A nor B is correct.

---

Definitions:

Tying

A sales tactic where the purchase of one product requires the buyer to also purchase another product that the buyer may not want.

Microsoft Antitrust

Refers to the series of legal actions against Microsoft for anti-competitive practices, particularly in relation to its handling of its operating system and software dominance.

Operating System

Software that manages computer hardware, software resources, and provides common services for computer programs.

Resale Price Maintenance

An agreement between a manufacturer and distributors or retailers to sell a product to end consumers at a specified minimum price.