The Auditor Is Testing for Unrecorded Retirements/disposals of Equipment

question 66

Multiple Choice

The auditor is testing for unrecorded retirements/disposals of equipment. Which of the following audit procedures would the auditor most likely use?

• A) Select items from the fixed asset master file and then physically locate them.
• B) Examine the repairs and maintenance amount for large debits.
• C) Compare current year's depreciation expense with the previous year's depreciation expense.
• D) Trace acquisition documents to the fixed asset master file.

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Definitions:

Loss Aversion

A cognitive bias reflecting the tendency for people to prefer avoiding losses to acquiring equivalent gains, suggesting that losses are perceived as more severe than gains.

Status Quo Bias

A cognitive bias that represents a preference for the current state of affairs, leading individuals to resist change.

Marginal Cost

The expense associated with creating an extra unit of a product or service.

Marginal Benefit

The further satisfaction or value an individual gains from consuming an extra unit of a certain product or service.