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

question 154

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:

Laboratory

is a controlled setting designed for scientific experiments, research, and testing.

Field Experiment

An experiment conducted in a natural setting rather than a controlled environment to test hypotheses in real-world conditions.

Survey

A method of gathering information from a sample of individuals, typically involving questionnaires or interviews.

Naturalistic Observation

A research method where subjects are observed in their natural environment without any manipulation or intervention by the researcher.