When using the cycle approach to segmenting an audit, the reason for treating capital acquisition and repayment separately from the acquisition of goods and services is that:
A) the transactions are related to financing a company rather than to its operations.
B) most capital acquisition and repayment cycle accounts involve few transactions, but each is often highly material, and therefore should be audited extensively.
C) both A and B
D) neither A nor B

Question

Quizplus · Accepted Answer

Capital acquisition and repayment are treated separately because they relate to financing rather than operations, and the transactions, though fewer, are often highly material, necessitating extensive audit.

When Using the Cycle Approach to Segmenting an Audit, the Reason