Which of the Following Would Generally Not Be a Component

question 33

Multiple Choice

Which of the following would generally not be a component of the audit of the acquisition and payment cycle?

• A) adequacy of controls over acquisitions of long-lived assets
• B) tracing disposals of long-lived assets to the fixed asset master file
• C) determining the adequacy of the funds available for capital expenditures
• D) reperformance of recorded depreciation expense

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Definitions:

Acid-Test Ratio

A liquidity ratio that measures a company's ability to pay off its current liabilities without relying on the sale of inventory.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year.

Gross Margin Percentage

A financial metric that represents the portion of sales revenue that exceeds the cost of goods sold, expressed as a percentage.

Net Income

The total profit of a company after all expenses, including taxes and interest, have been deducted from total revenue.