When Equipment Items Are Purchased for Cash

question 38

Multiple Choice

When equipment items are purchased for cash

• A) the inherent risk in the accuracy, valuation and allocation assertions are not affected.
• B) the inherent risk in the existence and occurrence and allocation assertions is high.
• C) the inherent risk in the accuracy, valuation and allocation assertions objectivity is low.
• D) the inherent risk in the accuracy, valuation and allocation assertions is zero.

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Definitions:

Ledger

A comprehensive collection of a company's accounts that records all financial transactions.

Income Statement

A financial document that reports a company's financial performance over a specific period, showing revenues, expenses, and net profit or loss.

Balance Sheet

A record presenting a business's holdings, obligations, and investor equity at a distinct time.

Unclassified Balance Sheet

A simple format of a balance sheet where assets, liabilities, and equity are listed in a single column without categorizing them into subcategories.