Which of the Following Accounts Would Most Likely Be Reviewed

question 41

Multiple Choice

Which of the following accounts would most likely be reviewed by the auditor to gain reasonable assurance that additions to property,plant,and equipment are not understated?

• A) Depreciation expense.
• B) Accounts payable.
• C) Cash.
• D) Repairs and maintenance expense.

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Definitions:

Variable Costs

Expenses that vary directly with changes in production or sales volumes, such as raw materials and direct labor costs.

Production Increases

A rise in the amount of goods and services produced over a given period of time by a business or economy.

High-low Method

A technique used in accounting and finance to estimate the variable and fixed components of a company's costs based on the highest and lowest levels of activity.

Total Fixed Costs

The sum of all expenses that remain constant regardless of the level of production or business activity.