For Each Analytical Procedure Listed Below, Identify a Potential Misstatement

question 67

Essay

For each analytical procedure listed below, identify a potential misstatement in the property management accounts it could help find.
a. Compute the ratio of depreciation expense to the related property, plant, and equipment accounts and compare to prior years' ratios.
b. Compare monthly or annual repairs and maintenance with previous years.
c. Compute ratio of insurance expense to the related property, plant, and equipment accounts and compare to prior years' ratios.

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Definitions:

Internal Thread

The spiral grooves cut inside a hole intended to engage with an external thread, such as on a bolt, allowing for parts to be screwed together.

Plain Bearings

Bearings that operate through sliding motion between the moving surfaces, without rollers or balls, used for simpler mechanisms.

Journal Bearings

Bearings that support a rotating shaft, where the shaft rotates within a lubricated sleeve or shell without rolling elements.

Tensile Strength

The maximum amount of tensile stress that a material can withstand before failure, an essential parameter in material selection and engineering design.