In Describing the Cycle Approach to Segmenting an Audit, Which

question 74

Multiple Choice

In describing the cycle approach to segmenting an audit, which of the following statements is not true?

• A) All general ledger accounts and journals are included at least once.
• B) Some journals and general ledger accounts are included in more than one cycle.
• C) The "capital acquisition and repayment" cycle is closely related to the "acquisition of goods and services and payment" cycle.
• D) The "inventory and warehousing" cycle may be audited at any time during the engagement since it is unrelated to the other cycles.

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Definitions:

Equilibrium Price

The cost at which the amount of products offered matches the amount of products requested.

Equilibrium Quantity

The quantity of goods supplied that is exactly equal to the quantity of goods demanded at the market equilibrium price.

Invisible Hand Principle

Adam Smith's concept that self-interested behaviors in a free-market economy lead to economic benefits for all.

Competitive Markets

Markets characterized by a high level of competition where no single buyer or seller can influence prices significantly, leading to efficient distribution of resources.