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Unformatted text preview: 13-2The audit of plant and equipment would probably require less time than the audit of current assets because:(1)Transactions in plant and equipment are usually of substantial dollar amount, and relatively few transactions may account for the $5,000,000 balance of plant and equipment.(2)There is often little change in the property accounts from year to year.(3)Errors in year-end cutoff of plant assets transactions do not usually affect net income as do cutoff errors in inventory.13-7Yes. Failure to record the retirement of machinery can affect net income. The machines will continue to be depreciated if not already fully depreciated, and any loss on the retirement will be omitted from the income statement.13-9In the first audit of a company for which other independent public accountants have previously made satisfactory audits, the auditors normally may limit their work on the beginning balances of plant and equipment to a general review of past transactions in plant assets.In the first audit of a concern that has not been previously audited by independent public accountants, the auditors must make a complete historical analysis of the property account. Only by such an approach can the costs and depreciation charges shown by the records be verified.by such an approach can the costs and depreciation charges shown by the records be verified....
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This note was uploaded on 11/19/2010 for the course ACCOUNTING Auditing taught by Professor G during the Spring '10 term at Oakton.
- Spring '10