Which of the Following Situations Would Most Likely Require Special

question 38

Multiple Choice

Which of the following situations would most likely require special audit planning by the auditor?

• A) Some items of factory and office equipment do not bear identification numbers.
• B) Depreciation methods used on the client's tax return differ from those used on the books.
• C) Assets costing less than $500 are expensed even though the expected life exceeds one year.
• D) Inventory is comprised of precious gemstones.

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Definitions:

Breach

A violation or infringement of a law, duty, agreement, or trust.

Nonconforming Goods

Products delivered under a contract that fail to meet the specifications or standards agreed upon.

Revocation

Termination of a contract that occurs when an offeror takes back the initial offer and annuls the opportunity for the offeree to accept the offer.

Accepted

A term indicating that an offer has been agreed upon by all parties involved, creating a binding contract.