When using the cycle approach to segmenting the 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 are correct.
D) Neither A nor B is correct.

Question

Quizplus · Accepted Answer

Capital acquisition and repayment are treated separately from the acquisition of goods and services because these transactions are related to financing a company rather than its operations (A), and they often involve few transactions that are highly material, necessitating extensive audit procedures (B).

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