An Auditor Analyzes Repairs and Maintenance Accounts Primarily to Obtain

question 55

Multiple Choice

An auditor analyzes repairs and maintenance accounts primarily to obtain evidence in support of the audit assertion that all:

• A)non-capitalizable expenditures for repairs and maintenance have been recorded in the proper period.
• B)expenditures for property and equipment have been recorded in the proper period.
• C)non-capitalizable expenditures for repairs and maintenance have been properly charged to expense.
• D)expenditures for property and equipment have not been charged to expenses.

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Definitions:

Implicit Costs

Costs that are not directly paid out or incurred in money but represent the opportunity cost of using resources owned by the firm for its own production instead of renting them out or selling.

Explicit Costs

Direct, out-of-pocket payments made by a business for resources and services used in production.

Incremental Cost

The additional cost associated with producing one more unit of a product or service.

Marginal Cost

The increase or decrease in the total cost of a product when the production volume is increased by one unit.