In Evaluating Control Risk and Effectiveness for Fixed Assets,controls Should

question 77

Multiple Choice

In evaluating control risk and effectiveness for fixed assets,controls should be designed for numerous purposes.Which of the following is not a usual control for fixed assets?

• A)identify existing assets,inventory them,and reconcile physical inventory with the property ledger.
• B)periodically reassess the appropriateness of depletion categories.
• C)identify obsolete or scrapped equipment and write it down to scrap value.
• D)periodically review management strategy and systematically assess the impairment of assets.
• E)all of the above are usual controls for fixed assets.

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Definitions:

Depreciation Expense

The allocated amount of the cost of an asset, spread out over the time it is expected to be used, reflecting its consumption, wear and tear, or obsolescence.

Indirect Method

In cash flow calculation, this method adjusts net income for non-cash transactions and changes in working capital to arrive at net cash provided by operating activities.

Net Loss

The negative financial result that occurs when a company's expenses exceed its revenues.

Merchandise Inventories

Goods purchased and held for resale by a business, including products available for sale and items in the process of production for sale.