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Online Quizzes
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1

During an audit of a non-public firm, the primary overall audit approach to audit plant assets and equipment of a continuing client is which of the following?
A)Analysis and inquiry.
B)Direct tests of year-end ending balances.
C)Tests of controls.
D)Tests of transactions during the year.
2

Which of the following is not correct concerning plant assets.
A)Few transactions ordinarily occur.
B)Typically there is little change in accounts from year to year.
C)Plant assets need to be tightly controlled to prevent defalcation.
D)Year-end cutoff of plant assets has no effect net income.
3

An auditor has found many new assets on the plant floor, which coincides with an increase in the equipment subsidiary ledger. However, the auditor has noticed that lease payments are being made to an equipment leasing company. The auditor should primarily be concerned with which financial statement assertion?
A)Rights and obligations.
B)Relevance.
C)Completeness.
D)Clerical accuracy.
4

A major piece of land that the company has recently purchased for expansion has been found to contain toxic levels of pollutants. The auditor should be concerned with which financial statement assertion?
A)Relevance.
B)Existence.
C)Valuation.
D)Completeness.
5

In analyzing the plant assets account, why is the examination of repairs and maintenance records important?
A)Rights.
B)Presentation.
C)Existence.
D)Valuation.
6

In examining the miscellaneous revenue account, an auditor discovers income from plant assets. What should be a primary audit concern?
A)That such assets have been removed from the ledger of property owned.
B)That such assets are not available for physical examination.
C)That the assets sold were fully depreciated prior to the decision to sell them.
D)That such assets have been replaced by comparable equipment.
7

Which of the following statements is not correct concerning intangible assets?
A)Auditors review the reasonableness of the client's amortization program.
B)A lack of physical substance.
C)Valuation is a primary audit concern.
D)Proper presentation as current assets.
8

When comparing an initial audit with a subsequent year audit for a particular client, the scope of audit procedures for which of the following accounts would be expected to decrease the most?
A)Accounts receivable.
B)Cash.
C)Marketable securities.
D)Property, plant, and equipment.
9

When performing an audit of the property, plant, and equipment accounts, an auditor should expect which of the following to be most likely to indicate a departure from generally accepted accounting principles?
A)A gain was recognized when a new asset was acquired at a price lower than its listed retail price.
B)Interest has been capitalized for self-constructed equipment.
C)Assets have been acquired from affiliated corporations with the related transactions recorded and described in the financial statements.
D)The cost of freight-in on an acquisition has been capitalized.
10

The auditors are least likely to learn of retirements of equipment through which of the following?
A)Review of the purchase returns and allowances account.
B)Review of depreciation.
C)Analysis of the debits to the accumulated depreciation account.
D)Review of insurance policy riders.







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