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In testing for unrecorded retirements of equipment, an auditor most likely would:
Suggested Answer: A
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Choice 'a' is correct. Tracing (old) equipment recorded in the books to the actual equipment during a plant tour is a control which tests for unrecorded retirements.
Choice 'b' is incorrect. Determining which assets are fully depreciated does not tell you which ones are retired, as fully depreciated assets may continue to be used.
Choice 'c' is incorrect. Selecting items from the plant tour and then tracing them to the equipment subsidiary ledger will provide evidence that all equipment is recorded. It will not detect whether recorded equipment has been retired. (This step is backwards.)
Choice 'd' is incorrect. Scanning the general journal for unusual equipment additions and excessive debits to repairs and maintenance expense provides evidence regarding fixed asset additions, not retirements.
33 comments · newest first
HA
Haydee
10 months ago
B could work too, especially for spotting fully depreciated stuff.
KA
Katie
10 months ago
Wait, how can you be sure all equipment is even there during the tour?
LY
Lynda
10 months ago
Totally agree, C is the way to go!
WI
Wilda
10 months ago
D seems a bit off for this situation, right?
CA
Cathrine
11 months ago
I think option C makes the most sense for tracking unrecorded retirements.
YV
Yvonne
11 months ago
I practiced a question similar to this, and I think tracing equipment from the tour back to the ledger is a solid method, so I lean towards option C as well.
TA
Tawny
11 months ago
I feel like scanning the general journal for unusual entries could help, but I can't recall if that's the best approach for this specific situation.
BL
Blair
11 months ago
I'm not entirely sure, but I remember something about comparing depreciation entries being useful for spotting unrecorded retirements. Maybe option B?
NO
Nobuko
12 months ago
I think option C makes the most sense since we need to verify what we see during the plant tour against the records.
EL
Elenore
12 months ago
Scanning the general journal for unusual equipment additions or high repair/maintenance expenses could be a good way to uncover potential unrecorded retirements. I'll make sure to keep an eye out for those types of transactions.
TY
Tyra
12 months ago
I think the key is to inspect the equipment I observe during the plant tour and then trace it back to the subsidiary ledger. That way I can identify any items that aren't properly recorded.
WI
William
1 year ago
Hmm, I'm a little unsure about this one. Should I be comparing the depreciation entries to prior years to look for fully depreciated equipment? Or is that not the best approach here?
DA
Dana
1 year ago
This seems like a straightforward audit procedure to test for unrecorded retirements. I'd probably start by selecting some equipment items from the accounting records and then physically locating them during the plant tour.
CH
Chaya
1 year ago
I think B is the correct answer, it seems like the most logical approach.
SH
Sheridan
1 year ago
I'm leaning towards D, it makes more sense to me.
VE
Veronika
1 year ago
I'm feeling a bit rusty on this topic, but I think option C is the way to go. Gotta love those plant tours, am I right?
RO
Roosevelt
1 year ago
I'm leaning towards option D actually. Unusual additions and excessive expenses could indicate something fishy.
CH
Cherrie
1 year ago
I think option A might also be a good approach. It's always helpful to physically locate the equipment.
MA
Maryln
1 year ago
I agree, option C seems like the most logical choice. Plant tours can be quite informative.
OR
Orville
1 year ago
Option B seems like a good way to find fully depreciated equipment, but I wonder if the auditor might miss any equipment that wasn't fully depreciated yet. I'll go with C to be safe.
LA
Lawanda
1 year ago
I agree, it's important to trace the equipment to the subsidiary ledger to ensure accuracy.
DA
Daren
1 year ago
I think option C is a good choice because it involves physically inspecting the equipment.
VI
Vivan
1 year ago
I disagree, I believe the answer is C.
JA
Janna
1 year ago
Haha, option A reminds me of that time I lost my car keys during a plant tour. Definitely going with C on this one.
HA
Halina
1 year ago
I think the answer is A.
GI
Gilberto
1 year ago
Option D sounds interesting, but I'm not sure scanning the general journal would be the most efficient approach. I'd go with B to compare depreciation entries.
VI
Vincent
1 year ago
Scanning the general journal for unusual additions and excessive repairs expenses could help uncover unrecorded retirements.
VI
Vincenza
1 year ago
I think inspecting items of equipment during the plant tour and tracing them to the ledger could also be effective.
NO
Novella
1 year ago
I agree, comparing depreciation entries seems like a logical way to identify unrecorded retirements.
JA
Jamal
1 year ago
I think option C is the best choice here. Tracing observed equipment to the ledger is a more reliable way to identify unrecorded retirements.
VA
Valentine
1 year ago
It's important to ensure that all equipment observed during the tour is accurately recorded in the ledger to prevent any discrepancies.
LE
Lettie
1 year ago
Tracing observed equipment to the ledger during the plant tour is a thorough approach.
SA
Salley
1 year ago
I agree, option C seems like the most effective method to detect unrecorded retirements.