Auditors Verify and Emphasize Current Additions of Equipment

question 116

Multiple Choice

Auditors verify and emphasize current additions of equipment. Which of the following is not a reason for this verification and emphasis?

• A) The amount of any given acquisition is often material.
• B) The equipment is likely to be kept and maintained in the accounting records for several years.
• C) There are usually fewer current period acquisitions of equipment, especially large equipment used in manufacturing.
• D) The balance carried forward in the equipment account from the previous year is important.

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Definitions:

Total Equity

The total value of an entity's assets after subtracting its liabilities, representing the owners' residual interest in the company.

Straight-Line Method

A method of calculating depreciation or amortization by evenly spreading the cost of an asset over its useful life.

Interest Semiannually

A payment structure for bonds or loans where interest payments are made twice a year.

Market Rate

The prevailing interest rate available in the marketplace for securities or loans.