The Auditor Needs to Gain Reasonable Assurance That the Equipment

question 34

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

---

Definitions:

Constrained Resource

A factor that limits the output of a process or the achievement of organizational goals, often critical in determining maximum production or service levels.

Special Order

An order for a product or service that is not part of the company's usual offerings or produced under unique specifications, often at a negotiated price.

Minimum Price

The lowest price at which a product or service can be sold, often set to cover costs or comply with legal requirements.

Machine Hours

A measure of the operating time of machinery used in production, commonly applied in calculating depreciation or allocating overhead.