AUDIT OF PPE Flashcards
(5 cards)
Which is the best audit procedure to obtain evidence to support the legal ownership of real
property?
A. Examination of corporate minutes and board resolutions with regard to approvals to
acquire real property.
B. Examination of closing documents, deeds and ownership documents registered and on
file at the register of deeds.
C. Discussion with corporate legal counsel concerning the acquisition of a specific piece of
property.
D. Confirmation with the title company that handled the escrow account and disbursement
of proceeds for the closing of the property.
B
When few property and equipment transactions occur during the year, the continuing
auditor usually obtains an understanding of internal control and performs
A. Tests of controls.
B. Analytical procedures to verify current year additions to property and equipment.
C. A thorough examination of the balances at the beginning of the year.
D. Extensive tests of current year property and equipment transactions.
D
Which of the following combinations of procedures is an auditor most likely to perform to
obtain evidence about fixed asset additions?
A. Inspecting documents and physically examining assets.
B. Recomputing calculations and obtaining written management representations.
C. Observing operating activities and comparing balances to prior period balances.
D. Confirming ownership and corroborating transactions through inquiries of client
personnel.
A
In testing for unrecorded retirements of equipment, an auditor is most likely to
A. Select items of equipment from the accounting records and then locate them during the
plant tour.
B. Compare depreciation journal entries with similar prior-year entries in search of fully
depreciated equipment.
C. Inspect items of equipment observed during the plant tour and then trace them to the
equipment subsidiary ledger.
D. Scan the general journal for unusual equipment additions and excessive debits to repairs
and maintenance expense.
A
Determining that proper amounts of depreciation are expensed provides assurance about
management’s assertions of valuation and allocation and
A. Presentation and disclosure C. Rights and obligations
B. Completeness D. Existence
A
