Tennessee Company Violated Company Policy by Erroneously Capitalizing the Cost

question 47

Multiple Choice

Tennessee Company violated company policy by erroneously capitalizing the cost of painting its warehouse. The CPA examining Tennessee's financial statements would most likely learn of this error by

• A) Discussing Tennessee's capitalization policies with its controller.
• B) Reviewing the titles and descriptions for all construction work orders issued during the year.
• C) Observing during the physical inventory observation that the warehouse has been painted.
• D) Examining in detail a sample of construction work orders.

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Definitions:

Consensus

A general agreement or collective opinion among a group of individuals, often achieved through discussion and compromise.

Technology Response

The way individuals, groups, or societies react and adapt to technological innovations and changes.

Correspondent Inference

Correspondent inference is a theory in social psychology that explains how individuals infer the disposition or traits of others from their observed behavior, especially when their actions are freely chosen.

External Attribution

The process of attributing the cause of a behavior or event to situational factors outside the control of the individual.