Which of the following is the best evidence of continuous ownership of property?

1. 

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 depreciation expense was erroneously understated.

D.Overhead allocations were revised at year-end.

2. 

Selecting a sample of property plant and equipment from observation and tracing to the property, plant and equipment register is used to test for

A.valuation

B.rights and obligations

C.presentation and disclosur

D.completeness

3. 

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.

4. 

When there are numerous property and equipment transactions during the year, an auditor who plans to assess control risk at a low level usually performs

A.tests of controls and extensive tests of property and equipment balances at the end of the year.

B.analytical procedures for current year property and equipment transactions.

C.tests of controls and limited tests of current year property and equipment transactions.

D.analytical procedures for property and equipment balances at the end of the year.

5. 

Which of the following is not a control that should be established for purchases of equipment?

A. Establishing a budget for capital acquisitions.

B.Requiring that the department in need of the equipment order the equipment.

C.Requiring that the receiving department receive the equipment.

D.Establishing an accounting policy regarding the minimum dollar amount of purchase that will be considered for capitalization

6. 

Which of the following is the best evidence of continuous ownership of property?

A.Examination of the deed.

B.Examination of rent receipts from lessees of the property.

C.Examination of the title policy.

D.Examination of canceled check in payment for the property.

7. 

Which of the following best describes the auditors' typical observation of plant and equipment?

A.The auditors observe a physical inventory of plant and equipment, annually.

B.The auditors observe all additions to plant and equipment made during the year.

C.The auditors observe all major plant and equipment items in the clients' accounts each year.

D.The auditors observe major additions to plant and equipment made during the year.

8. 

Which of the following is used to obtain evidence that the client's equipment accounts are not understated?

A.Analyzing repairs and maintenance expense accounts.

B.Vouching purchases of plant and equipment.

C.Recomputing depreciation expense

D.Analyzing the miscellaneous revenue account.

9. 

Which of the following is a customary audit procedure for the verification of the legal ownership of real property?

A.Examination of correspondence with the corporate counsel concerning acquisition matters.

B.Examination of ownership documents registered and on file at a public hall of records.

C.Examination of corporate minutes and resolutions concerning the approval to acquire property, plant and equipment.

D.Examination of deeds and title guaranty policies on hand.

10. 

Which of the following is the most important control procedure over acquisitions of property, plant, and equipment?

A.Establishing a written company policy distinguishing between capital and revenue expenditures.

B.Using a budget to forecast and control acquisitions and retirements.

C.Analyzing monthly variances between authorized expenditures and actual costs

D.Requiring acquisitions to be made by user departments.

11. 

Which of the following is not a test primarily used to test property, plant and equipment accounts for overstatement?

A.Investigation of reductions in insurance coverage.

B.Review of property tax bills.

C.Examination of retirement work orders prepared during the year.

D.Vouching retirements of plant and equipment.

12. 

Which of the following procedures is most likely to prevent the improper disposition of equipment?

A.Separation of duties between those authorized to dispose of equipment and those authorized to approve removal work orders.

B.The use of serial numbers to identify equipment that could be sold.

C.Periodic comparison of removal work orders to authorizing documentation.

D.Periodic analysis of the scrap sales and the repairs and maintenance accounts.

13. 

Property, plant, and equipment transactions include all of the following, except

A.self-construction of a new office building.

B.acquiring capital assets in exchange for stock.

C.recording operating leases.

D.abandoning capital assets.

14. 

Which of the following is not a common internal control activity related to the acquisition of property, plant and equipment?

A.Using a budget to forecast and control acquisitions and retirements.

B.Analyzing monthly variances between authorized expenditures and actual costs.

C.Requiring acquisitions to be authorized in relevant departments by the appropriate level of management.

D.Establishing a written company policy regarding the acquisition of raw material.

15. 

In testing plant asset account balances, an auditor decides to physically examine a sample of new additions listed on a client-prepared analysis. The procedure most likely contains evidence concerning management’s assertion of

C.rights and obligations.

D.completeness.

16. 

Tracing a sample of purchase requisitions to receiving reports and to the PP&E records is used to test

A.classification

B.cut off

C.occurrence

D.completeness

17. 

Validity of property plant and equipment needs to be established through the following activities except

A.agree the total cost of each major category of property plant and equipment in the general ledger with that of the property plant and equipment register

B.examining the trial balance for the balance of property plant and equipment

C.test check additions and disposals for the period in the general ledger against the property plant and equipment register and vice versa.

D.check the costing in the property plant and equipment register

Which of the following is a customary audit procedure for the verification of the legal ownership?

Which of the following is the most important control procedure over acquisition of property plant and equipment?

Which of the following is used to obtain evidence that the clients equipment accounts are not understated?

Which of the following would be least likely to use confirmations in connection with the Examination of?