Question 1

Match the balance sheet account with the income statement account that is typically audited at the same time.
-Investments

Accepted Answer

Investment income typically correlates with investments on the balance sheet and is audited at the same time.

Answer: A 
 Depreciation expense typically correlates with property, plant, and equipment on the balance sheet and is audited at the same time.

Answer: D 
 Interest expense typically correlates with loans and other interest-bearing liabilities on the balance sheet and is audited at the same time.

Answer: E 
 Bad debt expense typically correlates with accounts receivable on the balance sheet and is audited at the same time.

Answer: B 
 Insurance expense can vary and may or may not correlate with a specific balance sheet account, so it may not be audited at the same time as a specific balance sheet account.

Question 2

Match the balance sheet account with the income statement account that is typically audited at the same time.
-Accounts Receivable

Accepted Answer

Bad debt expense is directly related to Accounts Receivable as it represents the estimated amount of receivables that a company does not expect to collect. Auditing Accounts Receivable typically involves assessing the adequacy of the allowance for doubtful accounts, which impacts bad debt expense.

Question 3

Match the balance sheet account with the income statement account that is typically audited at the same time.
-Prepaid Insurance

Accepted Answer

Prepaid Insurance is an asset on the balance sheet that represents insurance paid in advance. As the insurance period elapses, a portion of the prepaid amount becomes an expense on the income statement (Insurance expense). Therefore, Insurance expense is typically audited at the same time as Prepaid Insurance.

Question 4

Match the balance sheet account with the income statement account that is typically audited at the same time.
-Property, Plant, and Equipment

Accepted Answer

Depreciation expense is typically audited at the same time as property, plant, and equipment because the amount of depreciation expense recorded in the income statement is based on the value of property, plant, and equipment on the balance sheet.

Answer: B
 Insurance expense is typically audited at the same time as property, plant, and equipment because the amount of insurance expense recorded in the income statement may be affected by the value and condition of property, plant, and equipment on the balance sheet.

Answer: D
 Interest expense is typically audited at the same time as property, plant, and equipment because the amount of interest expense recorded in the income statement may be affected by the financing terms and rates used to purchase property, plant, and equipment on the balance sheet.

Answers C and E are not applicable as they are not directly related to property, plant, and equipment on the balance sheet.

Quiz 15: Auditing the Financinginvesting Process: Long-Term Liabilities, Stockholders' Equity, and Income Statement Accounts

Match the balance sheet account with the income statement account that is typically audited at the same time. -Investments

Match the balance sheet account with the income statement account that is typically audited at the same time. -Accounts Receivable

Match the balance sheet account with the income statement account that is typically audited at the same time. -Prepaid Insurance

Match the balance sheet account with the income statement account that is typically audited at the same time. -Property, Plant, and Equipment