A Weakness in Internal Control Over Recording Retirements of Equipment

question 2

Multiple Choice

A weakness in internal control over recording retirements of equipment may cause an auditor to

• A)Inspect certain items of equipment in the plant and trace those items to the accounting records.
• B)Review the subsidiary ledger to ascertain whether depreciation was taken on each item of equipment during the year.
• C)Trace additions to the "other assets" account to search for equipment that is still on hand but no longer being used.
• D)Select certain items of equipment from the accounting records and locate them in the plant.

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Definitions:

Issuance

The process of offering new securities for sale to the public or private investors by a company or government entity.

Continuously Compounded

A method of calculating interest where earnings are immediately reinvested, leading to exponential growth of the investment over time.

Risk-free Rate

The theoretical return on investment of an absolutely risk-free asset, often represented by the yield on government securities.

Pure Discount Debt

A type of debt instrument that is issued at a discount to its face value, pays no interest, and is redeemed at its full face value at maturity.