In Describing the Cycle Approach to Segmenting an Audit, Which

question 74

Multiple Choice

In describing the cycle approach to segmenting an audit, which of the following statements is not true?

• A) All general ledger accounts and journals are included at least once.
• B) Some journals and general ledger accounts are included in more than one cycle.
• C) The "capital acquisition and repayment" cycle is closely related to the "acquisition of goods and services and payment" cycle.
• D) The "inventory and warehousing" cycle may be audited at any time during the engagement since it is unrelated to the other cycles.

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Definitions:

Borrowed

Borrowed refers to funds that have been taken on loan from external sources, which are expected to be paid back with interest over time.

Daily Compounding

The process where the interest on an investment is calculated daily and added to the principal, so that each subsequent calculation of interest includes interest previously earned.

Bank Account

A financial account maintained by a banking institution in which the financial transactions between a customer and the bank are recorded.

Withdraw

The act of removing funds from an account, decreasing investment in a particular asset, or retracting participation from an agreement or membership.