13-32. Multiple Choice Questions LO 13-3,5 Select the best answer for each of the questions below and explain fully dhe reason for your selection a. To assure accountability for fixed asset retirements, management should implement an internal control that includes: (1) Continaous analysis of miscellancous revense to locate any cash proceeds from the sale of plant assets (2) Periodic inquiry of plant executives by intemal auditors as to whether any plant assets have been retired. (3) Utilization of serially muambered retirement work orders (4) Periodic observation of plant assets by the internal auditors LO 13 6, 7 b. Tx anditors may conclude that depreciation charges are insufficient by noting (1) Insured values greatly in excess of book values (2) Large amounts of fully depreciated assets. trade-ins of relatively new assets (4) Excessive recurring losses on assets retired LO 13-3, 5 . Which of the following is an internal control weakness related to factory equipment? (1) Checks issued in payment of purchases of equipment are not signed by the controller (2) All purchases of factory equipment are required to be made by the department in need of the equipment. (3) Factory equipment replacements are generally made when estimated usefial lives, as indicated in depreciation schedules, have expired. (4) Procceds from sales of fully depreciated equipment are eredited to other income. O S 6 d which of the follo eng accounts should be reviewed by the au tors to gain reasonable assurance that additions to property, plant and cquapn nt are not (1) Depreciation. (2) Accounts Payable (3) Cash. LO 13-5,6 e. The auditors are most likely to seck information from the plant manager with respect to the (1) Adequacy of the provision for uncollectible accounts (2) Appropriateness of (3) Existence of obsolete machinery 13-32. Multiple Choice Questions LO 13-3,5 Select the best answer for each of the questions below and explain fully dhe reason for your selection a. To assure accountability for fixed asset retirements, management should implement an internal control that includes: (1) Continaous analysis of miscellancous revense to locate any cash proceeds from the sale of plant assets (2) Periodic inquiry of plant executives by intemal auditors as to whether any plant assets have been retired. (3) Utilization of serially muambered retirement work orders (4) Periodic observation of plant assets by the internal auditors LO 13 6, 7 b. Tx anditors may conclude that depreciation charges are insufficient by noting (1) Insured values greatly in excess of book values (2) Large amounts of fully depreciated assets. trade-ins of relatively new assets (4) Excessive recurring losses on assets retired LO 13-3, 5 . Which of the following is an internal control weakness related to factory equipment? (1) Checks issued in payment of purchases of equipment are not signed by the controller (2) All purchases of factory equipment are required to be made by the department in need of the equipment. (3) Factory equipment replacements are generally made when estimated usefial lives, as indicated in depreciation schedules, have expired. (4) Procceds from sales of fully depreciated equipment are eredited to other income. O S 6 d which of the follo eng accounts should be reviewed by the au tors to gain reasonable assurance that additions to property, plant and cquapn nt are not (1) Depreciation. (2) Accounts Payable (3) Cash. LO 13-5,6 e. The auditors are most likely to seck information from the plant manager with respect to the (1) Adequacy of the provision for uncollectible accounts (2) Appropriateness of (3) Existence of obsolete machinery