Chap013 - Chapter 13 - Property, Plant, and Equipment:...

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Chapter 13 - Property, Plant, and Equipment: Depreciation and Depletion Chapter 13 Property, Plant, and Equipment: Depreciation and Depletion True / False Questions 1. The auditors' approach to the audit of property, plant and equipment largely results from the fact that relatively few transactions occur. True False 2. A major control procedure related to plant and equipment is a budget for depreciation. True False 3. Evidence of continued ownership of property is obtained by vouching payments to a mortgage trustee. True False 4. The auditors typically observe all major items of property, plant and equipment every year. True False 5. Material purchases of assets from an affiliated company should be disclosed in the financial statements. True False 6. Idle equipment will generally need to be reclassified as a current asset. True False 7. The primary purpose of internal control over plant and equipment is to safeguard the assets from theft. True False 13-1
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Chapter 13 - Property, Plant, and Equipment: Depreciation and Depletion 8. A typical procedure in the audit of property is examination of public records to verify the ownership of the property. True False 9. Even when internal control is weak, a significant portion of the audit work on property, plant and equipment may be performed at an interim date. True False 10. In the audit of depletion the auditors must often rely on the work of specialists. True False Multiple Choice Questions 11. An auditor has identified numerous debits to accumulated depreciation of equipment. Which of the following is most likely? A. The estimated remaining useful lives of equipment were increased. B. Plant assets were retired during the year. C. The prior year's deprecation expense was erroneously understated. D. Overhead allocations were revised at year-end. 12. In testing for unrecorded retirements of equipment, an auditor might. A. Select items of equipment from the accounting records and then attempt to locate them during the plant tour. B. Compare depreciation expense with the prior year's depreciation expense. C. Trace equipment items observed during the plant tour to the equipment subsidiary ledger. D. Scan the general journal for unusual equipment retirements. 13. A plant manager would be most likely to provide information on which of the following? A. Adequacy of the provision for uncollectible accounts. B. Appropriateness of physical inventory valuation techniques. C. Existence of obsolete inventory. D. Deferral of certain purchases of office supplies. 13-2
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Chapter 13 - Property, Plant, and Equipment: Depreciation and Depletion 14. Which of the following would be least likely to address control over the initiation and execution of equipment transactions? A. Requests for major repairs are approved by a higher level than the department initiating the request.
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This note was uploaded on 04/06/2011 for the course ECON 3332 taught by Professor Craig during the Spring '11 term at Rensselaer Polytechnic Institute.

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Chap013 - Chapter 13 - Property, Plant, and Equipment:...

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