The Auditor Is Testing for Unrecorded Retirements/disposals of Equipment

question 66

Multiple Choice

The auditor is testing for unrecorded retirements/disposals of equipment. Which of the following audit procedures would the auditor most likely use?

• A) Select items from the fixed asset master file and then physically locate them.
• B) Examine the repairs and maintenance amount for large debits.
• C) Compare current year's depreciation expense with the previous year's depreciation expense.
• D) Trace acquisition documents to the fixed asset master file.

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Definitions:

Common Stock

A type of equity security that represents ownership in a corporation, giving shareholders voting rights and a share in the company's profits through dividends.

Cash Dividend Payments

Distributions of profit made by a corporation to its shareholders in the form of cash.

Price Appreciation

The increase in the market value of an asset over time, often resulting from economic factors, demand, and market conditions.

Savings Banks

Financial institutions primarily engaged in accepting savings deposits and paying interest to depositors.