Which of the Following Statements About the Audit of Fixed

question 110

Multiple Choice

Which of the following statements about the audit of fixed assets is the least correct?

• A) The primary accounting record for manufacturing equipment and other property, plant and equipment is generally a fixed asset master file.
• B) Manufacturing equipment and current assets are normally audited in the same fashion regardless of the activity within a particular account.
• C) The emphasis on auditing fixed assets is on verification of current-period acquisitions.
• D) Failure to record the acquisition of a fixed asset affects the income statement until the assets are fully depreciated.

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Definitions:

Net Increase

The amount by which something grows or goes up, calculated by taking total gains and subtracting any losses.

Inventories

The stock of goods or materials that a company holds for the ultimate goal of resale or production.

Investment

The purchase of new plants, new equipment, new buildings, and new residences, plus net additions to inventories.

Nominal GDP

The total market value of all goods and services produced in a country in a given period, measured using current prices without adjusting for inflation.