Explain the relationship between substantive tests of transactions for the acquisition and payment cycle and tests of details of balances for the verification of property, plant, and equipment. Which aspects of property, plant, and equipment are directly affected by the tests of controls and substantive tests of transactions and which are not?

Question

Jamar Blanchard

Business

26 September, 14:16

Explain the relationship between substantive tests of transactions for the acquisition and payment cycle and tests of details of balances for the verification of property, plant, and equipment. Which aspects of property, plant, and equipment are directly affected by the tests of controls and substantive tests of transactions and which are not?

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Answers (1)

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Georgina · Answer 1

The correct answer is PPE acquisitions for the current period have already been partially verified.

Explanation:

The source of the debits in the asset account is the acquisition journal: PPE acquisitions for the current period have already been partially verified as part of the acquisition and payment cycle.

The occurrence, integrity, accuracy, cut and classification of PPE acquisitions would have been examined: asset disposal, depreciation are not proven as part of the acquisition and payment cycle

PPE: only look for changes from year to year

Inventory: should not be maintained for more than 1 year