When an Auditor Reviews Additions to the Equipment (Fixed Asset)account

question 85

Multiple Choice

When an auditor reviews additions to the equipment (fixed asset) account to make sure that repair and maintenance expenses are not understated,she wants to obtain evidence as to management's assertion regarding

• A) Completeness.
• B) Existence.
• C) Valuation and allocation.
• D) Rights and obligations.
• E) Occurrence.

---

Definitions:

Return on Investment

A financial metric used to measure the efficiency of an investment, calculated by dividing the profit gained from the investment by its cost.

Residual Income

The amount of income that an individual has after all personal debts and expenses have been paid, often used in corporate finance to measure the excess of actual profit over the expected return on investment.

Operating Income

Earnings from a company's core business operations, excluding costs and revenues from financing and investments.

Invested Assets

Definition: Assets that are used or held for investment purposes, which may include securities, real estate, and other investment vehicles.