The Audit of Liverpool Ltd Had Been Completed and the Audit

question 37

Multiple Choice

The audit of Liverpool Ltd had been completed and the audit senior for the engagement prepared items for discussion.He argues that the following list of accounting changes violate the consistency qualitative characteristic of accounting information.As audit manager,which of the following items do you think are worthy of discussion with the audit partner?

• A) After five years of using straight-line depreciation for reporting purposes and accelerated depreciation for tax purposes, the entity decided to adopt accelerated depreciation for reporting purposes.
• B) The company uses an inventory valuation method that is different from the method used by other companies in the industry.
• C) The estimated remaining useful life of an asset was reduced due to the increase in volume of use of the asset.
• D) The company disposed of a subsidiary that had been included in the financial reports in prior years.

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Definitions:

Sublists

Portions or segments of a list that contain a sequence of elements from the original list, maintaining their order.

Loop Terminates

Refers to a condition or state that ends the execution of a loop in programming.

Index Variable

A variable used to control a loop or to access elements in data structures that use indices for addressing.

Selection Sort

A simple sorting algorithm that divides the input list into two parts: the sublist of items already sorted and the sublist of items remaining to be sorted.