AICPA Exam CPA-Auditing Topic 1 Question 113 Discussion

Actual exam question for AICPA's CPA-Auditing exam

Question #: 113
Topic #: 1

[All CPA-Auditing Questions]

In testing for unrecorded retirements of equipment, an auditor most likely would:

ASelect items of equipment from the accounting records and then locate them during the plant tour.

BCompare depreciation journal entries with similar prior-year entries in search of fully depreciated equipment.

CInspect items of equipment observed during the plant tour and then trace them to the equipment subsidiary ledger.

DScan the general journal for unusual equipment additions and excessive debits to repairs and maintenance expense.

Show Suggested Answer

Suggested Answer: A

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.

by Jenifer at Jul 06, 2025, 10:45 AM

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15 days 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.

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Lettie

6 days ago

Tracing observed equipment to the ledger during the plant tour is a thorough approach.

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Salley

10 days ago

I agree, option C seems like the most effective method to detect unrecorded retirements.

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