Multiple Choice Questions Select the best answer for each of the questions below and explain fully the reason for your selection.

e.The auditors are most likely to seek information from the plant manager with respect to the:

(1)Adequacy of the provision for uncollectible accounts.

(2)Appropriateness of physical inventory observation procedures.

(3)Existence of obsolete machinery.

(4)Deferral of procurement of certain necessary insurance coverage.

f.To strengthen internal control over the custody of heavy mobile equipment, the client would most likely institute a policy requiring a periodic:

(1)Increase in insurance coverage.

(2)Inspection of equipment and reconciliation with accounting records.

(3)Verification of liens, pledges, and collateralizations.

(4)Accounting for work orders.

g.Which of the following statements is not typical of property, plant, and equipment as compared to most current asset accounts?

(1)A property, plant, and equipment cutoff error near year-end has a more significant effect on net income.

(2)Relatively few transactions occur in property, plant, and equipment during the year.

(3)The assets involved with property, plant, and equipment ordinarily have relatively longer lives.

(4)Property, plant, and equipment accounts typically have a higher dollar value.

h.For the audit of a continuing nonpublic client, the emphasis of the testing for property accounts is on:

(1)All transactions resulting in the ending balance.

(2)Tests of controls over disposals.

(3)Transactions that occurred during the year.

(4)Performing analytical procedures on beginning balances of the accounts.