The Auditor Is Examining the Accounting Entries Made to the Accumulated

question 14

Multiple Choice

The auditor is examining the accounting entries made to the accumulated depreciation account during the year and notices a significant amount of debits to the account.Which of the following provides the most logical explanation?

• A)Large number of asset retirements
• B)Salvage values were revised downward
• C)Useful lives were revised downward
• D)Allocation of fixed overhead were revised

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Definitions:

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts.

Net Income

The remaining earnings of a corporation after deducting all operating costs and tax obligations from its revenue.

Dividends Declared

The action by a company's board of directors to distribute a specified amount of the company’s earnings to its shareholders.

Income Summary

An account to which the revenue and expense accounts are transferred at the end of a period to summarize the results of operations.