Which of the following accounts would most likely be reviewed by the auditor to gain reasonable assurance that additions to the equipment account are not understated?
A)Depreciation expense
B)Gain on disposal of equipment
C)Accounts payable
D)Repairs and maintenance expense

Question

Quizplus · Accepted Answer

Reviewing repairs and maintenance expenses will provide the auditor with an understanding of the expenditures made on equipment to keep it in good working order. By reviewing repairs and maintenance expenses, an auditor can determine whether maintenance expenses are being capitalized instead of being expensed, which could result in understated additions to equipment. A high level of repairs and maintenance expenses relative to the cost of the equipment could indicate that the equipment is not being properly maintained and may have a shorter useful life than reported by management.

Which of the Following Accounts Would Most Likely Be Reviewed